On 24 February, the Government published draft regulations that, if implemented, will impose new restrictions on pre-pack administration sales to connected parties. For all `substantial disposals' (which will include `pre-pack' sales) to connected parties, taking place within eight weeks of the administrators' appointment, the administrators will either need creditor consent or a report from an independent `evaluator'.
Context
Now that the UK has left the EU and the transition period ended on 31 December 2020, this briefing considers the key points of the legal and regulatory landscape from the perspective of Ireland.
Deal or no-deal?
In effect, there is both. The December 2020 EU-UK Trade and Cooperation Agreement1 (the “TCA”) includes a ‘deal’ so far as concerns EU-UK trade in many types of good. However, the TCA makes little provision for trade in services and so, broadly, it is ‘no-deal’ as regards most types of service.
With tech now more vital than ever for most businesses, the failure of an IT service provider can be catastrophic. As businesses suffer from the knock-on effects of the pandemic and insolvencies look set to increase, it is important for businesses to protect themselves as far as possible in their commercial relationships.
Protection for both the IT service provider and the business comes from the contract they enter into with each other. We take a look at the key points to consider.
IT service providers
Key Takeaways
Some interesting recent scheme and plan law of late, proving that schemes and plans continue to be popular restructuring tools for all types of companies and international groups.
DeepOcean companies (Part 26A plans) – January 2021
This was the first time that the court had to consider the application of the new ‘cross-class cram down’ procedure under Part 26A. Trower J approved the plans proposed by three DeepOcean companies but had reserved judgment and in late January handed down a written judgment with important guidance for future plans.
SUMMARY
The Corporate Insolvency and Governance Act 2020 (the Act) introduced significant changes to insolvency law, including permitting companies to propose a “restructuring plan”. The restructuring plan offers a flexible option for companies that sponsor defined benefit pension schemes to compromise their obligations to creditors and, potentially, to the pension scheme itself.
On 24 February 2021, the UK government laid The Administration (Restrictions on Disposal etc. to Connected Persons) Regulations 2021 before Parliament.
These draft regulations introduce (among other items) new restrictions on “pre-pack” disposals to connected persons and are seemingly a policy response to growing criticism around the inequity of pre-pack sales.
In Arlington v Woolrych, the failure by a junior creditor to gain the prior written consent of senior creditors pursuant to a Deed of Priority rendered the appointment of administrators invalid.
Facts
These case summaries first appeared in LexisNexis’ Insolvency Case Alerter. They represent some of the more interesting insolvency decisions to have been published recently.
This summary covers: