Background

In the 2018 Autumn Budget, the Chancellor announced his intention to reintroduce Crown Preference with effect from 6 April 2020. Due to the attempts to prorogue Parliament and the General Election last year, the necessary legislation was not passed. However, it has now been introduced in the Finance Bill 2020, with the later start date of 1 December 2020.

The COVID-19 crisis is already showing signs of pushing the UK economy into recession, has undoubtedly impacted the M&A market in the UK and increased the likelihood of businesses entering into insolvency proceedings. However, history tells us that shocks to the market do give rise to opportunities it's a question of knowing where they are and being prepared.

Insolvency in the construction industry is not just isolated to contractors, sub-contractors and consultants. Industry and economic pressures can affect all parties, including at times employers, therefore it is equally important for contractors to carry out due diligence when bidding for projects and to consider contractual mechanisms that can be put in place to protect against non-payment by the employer and insolvency risks.

Restructuring & Insolvency analysis: In Re C A & T Developments Ltd, the court found that the appointment of administrators had been motivated by an improper purpose and the purpose of the administration could not be achieved. In an application under Paragraph 81 of Schedule B1 to the Insolvency Act 1986 (IA 1986), the court therefore ordered the administration to end and the company to be wound up compulsorily.

A breathing space scheme for individuals with problem debt will be implemented by 2021, the Treasury has confirmed. Draft regulations are expected later this year.

Lenders, loan servicers, debt purchasers and other acquiring funds can now begin taking steps to ensure that they are prepared for this change.

What is breathing space?

An insight into the key issues and challenges facing global infrastructure projects, and a look at possible solutions and mitigations.

In brief

In today’s insecure commercial lettings market, it is becoming increasingly common for landlords to take a significant rent deposit when granting a new lease and to enforce their rights under the rent deposit deed. This is putting the drafting and enforcement of rent deposit deeds under scrutiny. How do the parties to a rent deposit deed protect their positions when the landlord assigns the reversion to the lease?

The U.K. government is proposing to reintroduce preferential status to certain taxes in U.K. insolvencies beginning 6 April 2020. If enacted:

• certain taxes owed to HM Revenue & Customs (HMRC) would rank ahead of floating charges in U.K. insolvencies;
• the legislation would be retroactive, applying to such tax liabilities incurred at any time prior to insolvency; and
• it is likely to have a significant impact on asset-based loans (ABLs) involving U.K. obligors.

Introduction

Where lenders are lending to and taking security from companies that may become subject to special administration regimes, the value of the security may be affected and enforcement options restricted. More companies are subject to these procedures than you might think. So, how do you identify whether your borrower is subject to one of these regimes? Should you place a lower value on your security? What are your enforcement rights? Might your borrower become affected after grant of the security?

Special administration regimes

The implications of taking an appointment over an insolvent business which is regulated by environmental law can be far reaching. Environmental regulation has become more stringent and the sanctions for breach can leave the IP exposed to liability, including (amongst other things) costs sanctions.

The main environmental regimes referred to in this update are the contaminated land and water pollution regimes.