In the wake of the Supreme Court's ruling that an insolvent company can adjudicate, the TCC have confirmed that there remain high hurdles to the insolvent party enforcing any adjudication decision.
Our emergence from social and economic lockdown has led to much discussion around “the new normal” for our personal and business lives. In that context, the Courts Service Annual Report for 2019 (“the 2019 Report”) published in July 2020 is an opportunity to look back upon the pre-COVID-19 operation of civil and criminal litigation in the Irish courts, particularly developments on the debt recovery site.
Late in the evening on 30 July, the last day before its summer break, the Irish parliament (Oireachtas) passed the Companies (Miscellaneous Provisions) (Covid-19) Bill 2020. This is likely to be signed into law and commenced within two weeks.
Three of its provisions are particularly relevant to insolvency processes during the COVID-19 crisis.
Creditors’ meetings
New legislation ushers in the largest change in the UK’s corporate insolvency regime in over 20 years and raises questions for pension schemes.
Fast-tracked through Parliament in the wake of the Covid-19 emergency, the Corporate Insolvency and Governance Act 2020 came into force on 26 June 2020. It brings in some temporary measures designed to support businesses affected by the pandemic and changes that have been expected for a while. We look at five aspects of the Act that the trustees and employers of UK pension schemes will need to know about.
The Irish Government has published the General Scheme of a Bill and related secondary legislation to address practical issues that have arisen for companies and cooperative societies as a result of the Covid-19 pandemic. We examine the scope of the measures and next steps for entities that can avail of its provisions.
Duration of proposed temporary measures
More than £46 billion has been lent or approved since March 2020 under the three loan schemes backed by the UK government – the Coronavirus Business Interruption Loan Scheme, the Coronavirus Large Business Interruption Loan Scheme, and the Bounce Back Loan Scheme – and more than £30 billion of VAT has been deferred by the government.
The Supreme Court has provided much needed clarity on whether an insolvent company can commence its own adjudication.
In the construction industry, insolvencies are an all-too-common occurrence – as are contractual disputes. There has until now been uncertainty about how the two legal regimes operate together where an insolvent party seeks to adjudicate for the sums it believes it is owed. This uncertainty has now been resolved, with the Supreme Court confirming that an insolvent company can bring an adjudication.
The long-awaited revamp of UK insolvency and corporate governance law has introduced significant changes to the effectiveness of termination on insolvency clauses in supply contracts.
For many companies facing financial stress, restructuring liabilities is the only way for their business to survive. Consensual restructuring, or voluntary workout, requires agreement from creditors to reorganise the company’s liabilities, and is typically implemented by agreement between the company and its creditors. Court-based restructuring processes, on the other hand, involve at least some degree of legal coercion of creditors to vary or release liabilities.
Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the leisure, travel/tourism, retail and hospitality sectors. These sectors will face longer term challenges due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer. However, these are not the only sectors that will suffer.