The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020, which will come into force on 4 May 2021, will provide individuals with the opportunity to obtain legal protection from creditors in the form of either a breathing space moratorium or a mental health crisis moratorium. Given the economic impact of the Covid-19 pandemic, there may be a significant number of individuals seeking to obtain a moratorium to pause action against them to recover debts.

Protecting debtors

Virgin Active has been in the news recently, as it has proposed restructuring plans which rely on the new legislation found in the Corporate Governance and Insolvency Act 2020.

In this insight, we will explain:

Alex Jay writes for Accountancy Daily on various scenarios for companies looking to restructure their office space in the wake of the pandemic and subsequent re-evaluation of the use of office space.

When an individual declares bankruptcy, the trustee-in-bankruptcy (trustee) may be able to claim, and sell, some of the bankrupt’s assets. The trustee can then use the proceeds from the sale to repay any money owed to creditors. Assets may include, but are not limited to, real estate, vehicles, tools, equipment, furniture, bank balances and lottery winnings.

A balancing act

Creditors with legitimate grounds to challenge scheme or restructuring plan proposals and who assist the court in so doing should not be unduly discouraged by the costs regime. At the same time, frivolous arguments should not be supported with the promise of a costs award without consideration of party’s interests and other factors.

Virgin Active restructuring plans

Duty of care in tort not established in favour of main contractor from third party sub consultant

We previously discussed the Court's decision in Yukon (Government of) v Yukon Zinc Corporation, 2020 YKSC 16, which opened the door to partial termination of agreements in a receivership, an action generally considered to not be permitted in the past.

KEY POINTS The risk that prepetition lease payments made by a lessee that is a debtor in a US bankruptcy will be clawed back from an aircraft lessor can be reduced if: • the lease is a true lease rather than a disguised secured loan or finance lease • one or both of basic rent and maintenance reserves are payable in advance (i.e., at the beginning of a rent period rather than at the end) • basic rent and maintenance reserves are payable monthly rather than quarterly or semiannually • the lessor enforces the lease’s payment obligations consistently • any payment made by a third party on beha

Summary

The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the Regulations) are effective from 4 May 2021. Whilst this will provide residential tenants with additional procedural protection in respect of rent arrears, this will be an unwelcome additional hurdle to landlords.

What do the Regulations do?

At the outset of the COVID-19 pandemic, provincial emergency orders required the majority of businesses to migrate their workforce to a work-from-home environment. As the pandemic has persisted, what was originally a short-term solution for many businesses, has led many of them to reconsider their current and future need for office space. For those businesses tied into long-term leases, many have turned to subleasing all or a portion of their space as a way to reduce their overhead.