On Saturday 28 March, the Secretary of State for Business Energy and Industrial Strategy announced changes to the insolvency regime with the aim of keeping viable companies trading through the unprecedented challenge of the COVID-19 pandemic.

Since the beginning of March, the UK has seen various high profile company failures as a result (at least in part) of COVID-19. Flybe and Laura Ashley may be the first of many businesses unable to react and adapt to the unprecedented challenges.

Midlothian Council v Raeburn Drilling and Geotechnical Limited & Others

In these unprecedented times, the U.K. government is seeking to preserve U.K. businesses and has already introduced significant measures to achieve that aim, including:

While the next few months may be uncertain for UK business in light of coronavirus (Covid-19), the mantra of "business as usual" will continue to apply to (most) organisations, and this may include carrying out a restructure of it.

What Is a Restructure?

In the context of a company or business, a restructure usually involves making changes in respect of its ownership, structure or assets.

The reasons for carrying out a restructure often include:

Although the position is fast-moving and guidance is expected to be given in due course by the Law Society, it is presently understood that remote video conferencing technology such as Skype or Zoom could be used by a practising solicitor to administer a statutory declaration.

The Chancellor has committed to doing “whatever it takes” to save businesses and workers and, as part of a raft of measures, has pledged to pay 80% of staff kept on by employers.

The ILA Technical Committee, in conjunction with the CLLS, has produced the attached briefing note that reminds practitioners and businesses of the flexibility of a UK administration to stabilise, protect, and, if necessary, restructure companies.

As a direct result of the restrictions imposed by the Government on us all in response to the COVID-19 pandemic, many companies have suddenly and unexpectedly found themselves in a position where they are unable to pay their suppliers and are therefore insolvent on a cash flow basis.

RAAs are a statutory restructuring mechanism which operate by apportioning the departing employer’s share of liability between it and remaining employers. As an RAA can be entered before the insolvency process is initiated, RAAs can permit corporate restructuring in response to financial hardship without triggering the departing employer’s insolvency.