Executive summary

On a UK company’s insolvency, the UK tax authority (HMRC) will become a preferential creditor in respect of certain unpaid taxes (Crown Preference) with effect from 1 December 2020. Despite lobbying against the move (including in light of the COVID-19 pandemic), the UK government has persisted with the change, perhaps in an attempt to shore up its tax take.

The reform in context

What is the Cape Town Convention?

EXECUTIVE SUMMARY

Executive Summary

What have we been up to?

The days and nights may well be getting noticeably cooler, but as a team we remain very much at simmer point in terms of the demands of newlyacquired business support and insolvency work and staying on top of recent legislative changes.

Amongst this month's work highlights have been:

The United Kingdom Department for Business, Energy and Industrial Strategy has announced that certain temporary measures put in place under the Corporate Insolvency and Governance Act 2020 (CIGA), which became law on 26 June 2020, will be extended.

Statutory Demands and Winding-Up Petitions

As we discussed in our July newsletter, the Corporate Insolvency and Governance Act 2020 (CIGA 2020) has introduced a new Restructuring Plan, which is similar to existing Schemes of Arrangement. In essence a Court can sanction a restructuring plan which binds a dissenting class   of creditors, if that class would be in no worse a position than the most likely alternative.

This was an application by the administrators of Lehman Brothers International (Europe) Ltd for a direction under paragraph 63 of Schedule B1 IA86 that they be at liberty to consent to a request from the company’s directors to distribute surplus funds to the company’s sole shareholder.

The Court has granted one of the first Winding Up Orders under CIGA 2020.

The winding up petition had been issued on 1 May 2020, 8 weeks before CIGA 2020 came in to force, but after 27 April 2020, the date from which CIGA 2020 applies retrospectively. As a result, the petitioner could not have ensured that the winding up petition satisfied the requirements of CIGA 2020, as those requirements were not in existence at the time that the petition was presented.

The liquidators of a subsidiary company had submitted a proof in the CVA of the parent company. The proof was based upon a claim under section 239 of the Insolvency Act 1986 (IA86) that  certain payments by the parent to the subsidiary had amounted to unlawful preferences of the company. The liquidators appealed against the decision by the supervisor of the CVA to reject that proof.