What have we been up to?

Aside from our collective (but not wholly unexpected) disappointment that the lifting of the remaining Covid restrictions has been pushed back to 19 July, the team continue to advise on a wide range of insolvency related matters, amongst the recent highlights being:

Summary

With government support instigated by the Covid-19 pandemic coming to an end, there is an inevitability that some hotel owners will sadly not have the liquidity to continue to operate in the medium term. Eager investors are seeing opportunities and are waiting to deploy capital. We examine the main considerations for investors who are looking to purchase distressed hotel assets out of an insolvency process.

General Introduction

At the end of September, Government protections that were designed to prevent a flood of insolvencies are set to be lifted. Specifically, the suspension of the provisions around wrongful trading will be over and creditors can once again seek to put companies who owe them money into liquidation. 

Limited liability is one of the fundamental concepts in our understanding of company law. Even people who know very little about the working of limited companies may know that directors and shareholders are not liable for the debts of their companies. For the last 160 years, the protection of limited liability has been a key factor in economic growth and commercial activity as it has allowed entrepreneurs to speculate and take risks that they might not have been willing to do if the risk of personal liability overshadowed their decision-making.

This analysis was first published on Lexis®PSL on 09/07/2021 and can be found here (subscription required).

Rogue directors will find themselves in the firing line if and when The Rating (COVID-19) and Directors Disqualification (Dissolved Companies) Bill, which is currently making its way through parliament, comes into force. The proposed bill will enable the investigation and potential disqualification of directors of dissolved companies, and responds in particular to concerns around COVID-related fraud.

Background

This note summarises the duties that directors of companies incorporated in England and Wales are subject to

This note summarises the duties that directors of companies incorporated in England and Wales are subject to.

This note explains those duties, and matters that directors should consider in relation to them, in the context of the COVID-19 pandemic.

At the recent R3 Scotland Forum[1], experts in the hospitality and leisure sector came together with the restructuring and insolvency profession to discuss the issues the sector is facing as the country emerges from lockdown. The panel discussion which was chaired by Judith Howson, Senior Manager at French Duncan and member of the R3 Scotland Committee was led by Steven Fyfe, head of the Scotland Hotels Divisions within Savills.

The pandemic has created a chaotic business environment in which it is has at times been practically impossible to make any definitive plans. Lockdown measures have changed regularly, legislation has been introduced and extended and the rules for conducting business (when it is even possible to trade) have varied across the UK and have at times been criticised by those most harshly effected as being arbitrary and unscientific. All of this has often happened at very short notice.

There is a faint light at the end of the COVID tunnel for commercial landlords regarding timings and the ability to recover unpaid rent arrears. The UK Government has announced an extension to the current prohibition on forfeiture and winding up petitions, to enable it to introduce new legislation to help manage the £6bn estimated rent arrears.

The announcement provides a clearer pathway for both landlords and tenants, many of whom have paid no, or little rent since March 2020 as a consequence of the various Government imposed lockdowns.