Last week the UK Government issued a consultation document on changing UK insolvency legislation to enable distressed companies to obtain a moratorium for up to three months, with the possibility of an extension, under the supervision of an insolvency practitioner. The moratorium would prevent all creditors, including secured creditors, from taking any enforcement action against such companies without first applying to court for permission to do so. This follows a briefing paper published by R3 last month suggesting a similar moratorium process.

The UK’s EU Referendum on membership is looming on the horizon – What are the legal implications of a so-called “Brexit” for restructuring and insolvency professionals?

The EU Referendum Act 2015 obtained Royal Assent on 17 December 2015 and provides for the following question to be put forward for voting in a referendum in the UK until the end of 2017: “Should the United Kingdom remain a member of the EU or leave the EU?”

On 1 October 2015, several changes to UK insolvency legislation are coming into force. Insolvency practitioners and stakeholders should take note of the following key amendments to make sure they are up to date with these changes.

In February this year, Squire colleagues Paul Muscutt and Helen Kavanagh wrote about the Carrington Wire Defined Benefit Pension Scheme, where  the UK Pensions Regulator accepted a payment of £8.5m to settle warning notices of £17.7m issued to Russian companies that had guaranteed sums due from Carrington Wire to the Scheme (“the Guarantee”).

Congratulations to all those who lobbied government to extend the carve out for insolvency from the restrictions imposed by the Jackson Reforms. We have just received confirmation from the Ministry of Justice that the exemption granted to Insolvency Practitioners has been extended indefinitely.

A real shot in the arm for Insolvency Litigators across the UK.

House of Commons: Written Statement (HCWS303)

Ministry of Justice

This week the Court of Appeal has heard the long awaited appeal in Jervis and another v Pillar Denton Limited (Game Station) and others, better known as the Game Station case, which (depending on the outcome) may trigger a drastic change to the way in which rent in administration is treated.

According to a ruling of the High Court, Financial Support Directions and Contribution Notices issued by the Pensions Regulator once an English insolvency process has commenced rank as expenses of the insolvency process (and therefore take precedence over ordinary creditors). This ruling will cause huge practical difficulties for insolvency practitioners. The decision is subject to appeal.

One of the significant changes to distributions in insolvency made by the Enterprise Act 2002 was the abolition of the preferential status of debts owed to the Crown and the introduction of a provision for the creation of a ‘ring-fenced fund’ (also known as the “prescribed part”, an amount currently capped at £600,000) from the proceeds of floating charges created after 15 September 2003 to be applied in distribution to unsecured creditors.

During contract negotiations parties usually agree what law and which courts will determine any disputes arising from that contract. This brings certainty for the parties. However that certainty can vanish if one party is a foreign registered company and becomes insolvent – the other party may suddenly become exposed to unexpected foreign insolvency law. At this point, the drafting of a jurisdiction clause can be worth millions.

This is the situation in the recent case of Global Maritime Investments Cyprus Limited v O.W. Supply & Trading A/S [2015] EWHC 2690 (Comm).

It is very much the nature of the job that appointed Office Holders are required to make difficult and challenging decisions on each and every case they take. On some occasions those decisions are well received – on others, not so well. Creditors affected by those decisions can take comfort that the Office Holder is experienced in making those difficult decisions, is an Officer of the Court, has their own licence to protect and, fundamentally, has a duty to treat all creditors fairly.