Nicola Sharp considers the recent appeal decision in Tradition Financial Services Ltd vBilta (UK) Ltd [2023] EWCA Civ, and the ways in which it affects the definition of fraudulent trading.

With an increased number of businesses experiencing financial difficulties given rising inflation, the weaker pound and interest rate increases, debt restructurings are becoming, and are expected to continue to become, more common.

Such restructurings are often achieved by a third-party lender releasing or materially amending all or part of its debt, which would result in taxable income arising to a UK corporate borrower unless a relevant exemption applies.

Today’s statistics reveal a stark reality that insolvencies are continuing to climb in the face of record levels inflation, increasing interest rates and an ongoing cost-of-living crisis, which is pushing businesses to breaking point. The situation is exacerbated by the lack of any new government support for businesses, which are particularly affected by the steep rise in energy costs.

Wind the clock back a couple of years to (dare I mention it…) the Covid-19 pandemic, and insolvency practitioners were getting mildly giddy about a new development in the form of a standalone moratorium. Slotting in at the forefront of the Insolvency Act 1986 courtesy of the Corporate Insolvency and Governance Act 2020 (CIGA), the moratorium was designed to give companies a breathing space to find a solution to their troubles when insolvency was knocking on their door.

Since the introduction of the Corporate Insolvency and Governance Act 2020 (CIGA) and the creation of the new Part 26A restructuring plan procedure, questions have been raised about whether the cost of using such a procedure would restrict its use to larger, better capitalised companies.

ICC Judge Barber’s judgment in the case of Purkiss v Kennedy & ors (Re Ethos Solutions Ltd) [2022] EWHC 3098 (Ch) deals with a complex and late application for joinder and to re-amend proceedings. It was handed down following a four day hearing and weighs in at over 200 paragraphs, facts indicative of the unusual nature of the application.

Although the IMF recently announced at Davos that it would upgrade its global economic forecasts, with an improvement predicted in the later part of 2023 and into 2024, times remain difficult for many companies and their lenders – and are likely to remain so for a while yet.

While many businesses (particularly in the retail, leisure and hospitality industries) will have been hoping to capitalise on a busy festive period, sadly for many the busy period came too late as corporate insolvencies rose again in December. Overall, company insolvencies were 32% higher than December 2021, and 76% higher than in December 2019 (i.e.

We explore the utility of restructuring plans for small to mid-sized companies in 2023 as Government pandemic support tails away whilst inflation and energy prices continue to soar.

It is difficult to predict what 2023 might hold for businesses in the UK. Given the difficult economic environment, many will already be facing a challenging start to the year. Although the challenges of the pandemic (such as lock downs) have gone, others have materialised. Energy price hikes and inflation rises continue to make trading conditions tough.