The last 12 months have seen frenetic changes in the field of insolvency law. Some of the changes in 2020 were already in the pipeline before we'd even heard of coronavirus but were accelerated by it, some were brought in purely in response to the pandemic and others had nothing to do with it at all.
CIGA
The majority of the changes to legislation apply UK wide and come from the most important piece of insolvency legislation that we've see in a generation - the Corporate Insolvency and Governance Act 2020 ("CIGA").
The challenges facing the businesses of the United Kingdom at the start of 2021 are perhaps greater than any of us have seen in our lifetimes. In addition to the economic consequences of the restrictions on daily life imposed to counter Covid-19, we are now seeing the effects of the exit of the UK from the EU with businesses having had little time to get up to speed on the new regime.
As always, there has been a lot going on in insolvency. We have highlighted below a few of the more important developments that we have seen in a very busy 2020 for insolvency lawyers.
Re Tokenhouse VB Ltd (Formerly VAT Bridge 7 Ltd) [2020] EWHC 3171 (Ch)
We all know 2020 made an impact – and as we look at the year ahead, there are a few repercussions of the incredible strain placed on businesses that are likely to come into the limelight as a result. While there are some global trends in litigation – like litigation funding and class actions - some Scotland specific trends are also worth highlighting. With that in mind, here are the five key things for litigators to watch in the year ahead:
1) Frustration and leases in Scots law
WHO WILL ADVOCATE FOR THE "HUMBLE" FLOATING CHARGE-HOLDER?[1]
Introduction
Having managed to undertake my first piece of business development last Friday by playing golf with a client and a couple of colleagues - all socially distanced of course - I then managed to avoid most of the news at the weekend.
When Monday morning came and I logged on to my home desk I was therefore feeling rather chipper. Sadly the feeling didn't last long as I then read that:
I have obviously been a good boy this year because my gift from the Insolvency Service has arrived - the November 2020 Insolvency statistics. And like any properly brought up child, I decided to sneak a peek at my present before Christmas Day.
What the numbers show us is a continuation of the trend that the previous figures disclosed - corporate insolvencies remain markedly lower than the equivalent period last year. In Scotland in particular this is driven by a massive reduction in the number of compulsory liquidations this year (Nov 2019 - 56; Nov 2020 - 13).
Earlier this year the UK Government introduced a number of temporary measures intended to avoid large scale insolvencies across the country. One of these measures was the suspension of wrongful trading liability.
This suspension was in place until September 30, 2020. Most of the other temporary measures were extended (e.g. the effective suspension of winding up petitions by creditors has been extended until December 31, 2020) but the suspension of wrongful trading liability was not extended.
Where a company becomes insolvent, there is a considerable risk that its employees end up being both out of a job and out of pocket. With the news that Arcadia Group has fallen into administration this week, we explore where employees stand when they are owed money from their insolvent employer and what steps they can take to maximise the chance of recovering sums.
A floating charge will usually set out the rights exercisable by the floating charge holder after the point at which that floating charge has become "enforceable". The floating charge might also contain language clarifying when the charge is deemed to be enforceable - typically after the occurrence of an event of default set out in the underlying facility agreement which is secured by that charge