The latest news and developments in retail mortgage lending and regulation.

This month in summary:

News

Government updates on the pandemic

There have been a number of updates that will affect lenders in respect of the pandemic. The key stories are:

With the Company Insolvency and Governance Act 2020 (CIGA 2020) grabbing all the headlines, the Finance Act 2020 (FA 2020), which received Royal Assent on 22 July, has gone somewhat under the radar. However, it has the potential to have an even greater impact on the restructuring market than CIGA 2020.

The two principal measures being brought in are:

WHO WILL ADVOCATE FOR THE "HUMBLE" FLOATING CHARGE-HOLDER?[1]

Introduction

Winding up a company – liquidation – applies in circumstances where a company is unable to pay its debts. In that situation, the company's directors, creditors or contributories can present a winding up petition. (This can be found in sections 122, 123 and 124 of the Insolvency Act 1986.)

A company is deemed unable to pay its debts if:

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:

The question of whether or not a trustee in bankruptcy can sell a family home to help recover the debts of an individual varies on a case-by-case basis. The law in Scotland provides protection to a debtor's immediate family, but permission can still be granted to sell the property – if five factors are considered first.

Company Voluntary Arrangements (CVAs) are an insolvency procedure established under the Insolvency Act 1986 which allow a struggling company to reach a compromise on debts due with a sufficient majority of creditors, thereby avoiding a formal insolvency. They have primarily been used only by large high street retailers and are not often considered, particularly in Scotland, a realistic option for small and medium companies (SMEs).

In the face of the COVID-19 pandemic and with a new model available, we believe it is time for a rethink.

For litigators the most important provision is the extension of the restrictions on the use of statutory demands and winding up petitions until 31 December 2020. The Act, of course, provides that no winding up petition can be presented on the basis of a statutory demand during the relevant restricted period and that where a winding up petition is presented (by a creditor on any basis) a court must be satisfied that coronavirus has not had a "financial effect" on the company before the presentation of the petition.

In our update this month we take a look at three cases that provide helpful clarification from the courts on issues that will be of interest to the insolvency and fraud industry - the key message from each case confirms:

Defendant's threat of insolvency did not prevent adjudicator's decision being enforced.

ENGLAND AND WALES PREVIEW OF 2018 January 2018 LEGAL GUIDE HERBERT SMITH FREEHILLS 01 page CONTENTS Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02 Brexit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03 Competition, Regulation and Trade . . . . . . . . . . . . . . . . . . 05 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 07 Corporate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 08 Dispute Resolution . . . . . . . .