The UK government has extended its suspension of various rules and procedures affecting distressed businesses as a result of the coronavirus (COVID-19) pandemic. However, with the UK lockdown easing on a rolling basis up to 21 June 2021, these may be the last of the blanket extensions across all of these areas. Expect the gradual reintroduction of some of the rules and procedures from 1 July onwards.

The Extensions to the End of June 2021

On March 27, 2021, President Biden signed into law the COVID-19 Bankruptcy Relief Extension Act (the Extension Act). The Extension Act temporarily extends certain COVID-19 bankruptcy relief provisions enacted as part of the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act), which were further amended and/or extended as part of the Consolidated Appropriations Act (the CAA). Certain of the amendments included in the CAA and the Extension Act are highlighted below:

Debtors and Paycheck Protection Program Loans

As the UK slowly emerges from the second wave of the COVID-19 pandemic, the government has announced the further extension of the duration of certain temporary measures initially introduced pursuant to the Corporate Insolvency and Governance Act 2020 (CIGA).

On 24 February 2021, the government published new draft Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 (the Regulations), following the consultation process conducted in late 2020. The Regulations are still to be debated by Parliament, but are expected to come into effect on 30 April 2021 with few substantive amendments.

On 1 March 2021, Brazos Electric Power Cooperative, Inc. (“Brazos”) commenced a chapter 11 bankruptcy case in the United States Bankruptcy Court for the Southern District of Texas. Brazos is a Texas-based non-profit electric cooperative corporation that provides wholesale electricity to its members, which, in turn, provide retail electricity to Texas consumers.

With the fallout from the pandemic hitting many businesses, those considering insolvency should look at the broad gamut of options on offer to avoid winding up the company. Matthew Padian, managing associate, explains.

After a somewhat leisurely start, case law regarding the new restructuring plan in Part 26A of the Companies Act 2006 now seems to be picking up pace.

In Uralkali v Rowley and another [2020] EWHC 3442 (Ch), the High Court has confirmed the position in relation to the duties that officeholders owe to third parties involved in the sale process of a business and assets out of an insolvent estate.

On 13 January 2020, the High Court sanctioned the restructuring plans proposed by three UK companies in the DeepOcean group, under Part 26A of the Companies Act 2006.

The long-anticipated wave of civil enforcement actions involving participants in the Paycheck Protection Program (PPP) has begun.