Restructuring and insolvency issues are rarely out of the news at the moment, with a range of businesses seeking to adapt to the challenges of a post-COVID-19 world. You might have seen stories about struggling businesses going into administration or liquidation, or securing a company voluntary arrangement (CVA).
With the football transfer window having closed on another round of multimillion-pound transfers, the perception continues that football is a sport awash with cash. However, as football plays on behind closed doors, one need not look too far beneath the surface to uncover clubs across the country struggling to cope with the financial impact of COVID-19.
On 11 September 2020, the Insolvency Act 1986 (HMRC Debts: Priority on Insolvency) Regulations 2020 were made. The Regulations will come into force on 1 December 2020.
The Regulations set out the debts due to HMRC that will have ‘secondary’ preferential status in insolvencies from 1 December 2020. They are debts in respect of PAYE income tax, employee NICs, construction industry scheme deductions and student loan repayments. VAT debts are to be treated in the same way, though are not covered by these Regulations.
Despite the ongoing global pandemic, opportunities for stressed and distressed investments have not been as prolific as many expected. The window for entry into credits opened and closed more quickly than imagined. Nevertheless there have been several high-profile restructurings using the English scheme of arrangement. Of course, some of these were already in motion prior to the onset of the pandemic. A handful of these have sought to test the recently enacted insolvency regime, whilst others have tested more established legislative principles.
In July 2020, when COVID-19 still seemed like a relatively new topic, I published an article that set out in detail the reforms brought in by the Government – partly to try to tackle the impact of COVID-19 – in the Corporate Insolvency and Governance 2020 (“CIGA”).
A number of recent extensions and changes to temporary measures have been announced that impact insolvency practice and procedure, what are they?
Recent insolvency law reforms in the UK, Singapore and Australia impact upon the ability of a party to a construction contract to terminate it due to the other party's insolvency.
Background
It's fair to say 2020 has been a particularly challenging year for businesses, across most sectors. The closing and re-opening of premises, adapting business set-ups and procedures, downturns in customer numbers – all of these things have created new financial pressures.
On 8 October 2020, the UK government published a report reviewing voluntary measures introduced in 2015 to improve the transparency of pre-pack sales in administration.
Following its decision in July to consider restructuring options in light of its mounting debts, the popular restaurant chain Pizza Hut has reached an agreement with its creditors by way of a company voluntary arrangement (CVA) that will see 215 of its 244 restaurants (88%) continue trading, as well as retaining around 5,000 of its 5,450 employees (92%).