The UK left the European Union (EU) on 31 January 2020 and the transition period in which EU rules continued to apply ended on 31 December 2020. As such, for insolvency proceedings opened in England after 31 December 2020, they will no longer benefit from automatic recognition in an EU member state.
Therefore, insolvency practitioners (IP) of a company with multijurisdictional operations or assets will be required to make an application in the relevant EU jurisdiction to have proceedings recognised in that jurisdiction.
From 6 April 2021, a new regime for witness statements in the Business and Property Courts will come into force. Practice Direction 57AC will introduce significantly tighter requirements that will apply to all trial witness statements signed on or after 6 April 2021, including those in claims that have already been issued.
Purpose of the new regime
Prior to 1st January, 2021, the cross-border recognition and enforcement of insolvency proceedings and judgements between the European Union ("EU") and the United Kingdom ("UK") was largely consolidated within the framework of the European Insolvency (Recast) Regulation (the "EIR") which generally attributed automatic recognition to such proceedings and/or judgements. Following the end of the Brexit transitional period on the 31st December 2020, the EIR no longer applies to the UK.
STOP RIGHT NOW, THANK YOU VERY MUCH – I NEED SOME TIME FOR A RESCUE.
THE PART A1 MORATORIUM
The moratorium is an insolvency process introduced by the Corporate Insolvency Governance Act 2020. It allows a financially distressed company to obtain temporary protection from creditor action, while the company attempts to rescue itself as a going concern. It is a debtor-in-possession process, overseen by a monitor—an insolvency practitioner.
Who can use it?
With an increase in airline restructuring activity caused by the Covid-19 pandemic, aircraft financiers, lessors and their lawyers around the world have been analysing whether a restructuring plan under Part 26A of the Companies Act 2006 (a ‘Plan’) can be used by debtors to modify, without the creditors’ consent, their obligations under certain leases and security agreements to which the Cape Town Convention applies.
The UK’s new “restructuring plan” was enacted in June 2020.1 This highly-anticipated regime introduced (for the first time into English law) a tongue twisting “cross-class cram down” (CCCD) mechanism by which a restructuring plan can (at the court’s discretion) be imposed on an entire class of dissenting creditors or members.
Until recently, only two companies had successfully used the restructuring plan regime.2 In both instances, CCCD was not considered as the required voting thresholds (i.e. 75%) were met.
Background
The Debtor was 82 years of age, and subject to a bankruptcy petition in the County Court in the sum of £62,000 which was heard on 19 December 2019.
Over the last 12 months, global markets have been amazingly resilient, indeed even buoyant, aided in large part by governments around Europe and the world providing seemingly unlimited funding and extensive financial stabilisation measures, such as quantitative easing.
This, coupled with protective legislation for companies to prevent insolvency filings and to ensure continued trading – for example, moratoriums, relaxations on insolvency filing obligations and restrictions on creditor actions – has given businesses significant breathing space and prevented widespread failures.
…there is nothing to say that directors who genuinely believe that the clouds will roll away and the sunshine of prosperity will shine upon them again and disperse the fog of their depression are not entitled to incur credit to help them to get over the bad time”
The words of Buckley J, Re White & Osmond (Parkstone) Ltd (unreported)
Very interesting judgment yesterday from Zacaroli J in "gategroup Guarantee Limited" (with a small g) that Part 26A plans are insolvency proceedings and therefore fall outside European civil and commercial jurisdictional rules. Pre-Brexit case law tells us that Part 26 schemes are probably not insolvency proceedings and are therefore capable of falling within those rules. Zacaroli J found that the "financial difficulties" threshold conditions to Part 26A plans (which do not exist for Part 26 schemes) made a significant difference.