Short Read:
Despite the law not yet being in force, the High Court has this week granted an unnamed high street retailer an injunction preventing one of its landlord creditors from presenting a winding-up petition against it on the expectation that the restrictions in the Bill will shortly be enacted.
On 3 June 2020, the Corporate Insolvency and Governance Bill was debated by the Committee of the Whole House of Commons. This follows on from the first reading in the House of Commons on 20 May 2020. This is the bill which enacts many of the measures referenced in the government's announcements earlier this year.
Traditionally, Midsummer’s Day marks a time for festivities and optimism. But, as 24th June approaches, commercial landlords and tenants are unlikely to enjoy such sanguinity.
This article was first published by CoStar News on 5 June 2020 and can be seen here.
Following the posting of the article I co-wrote with Morayo Fagborun-Bennett on the Recovery of Commercial and Residential Rent Arrears, there have been a couple of developments of note.
1. On 4 June 2020 the Chancellor handed down his decision in Re Akkurate Ltd (in Liquidation) [2020] EWHC 1433 (Ch). In doing so he brought to an end (at least for now) an ongoing debate as to whether s236 Insolvency Act 1986 (“IA 1986”) has extraterritorial effect, concluding that he was bound by precedent to conclude that it does not but carving out an exception where the Council Regulation (EC) No 1346/2000 on Insolvency Proceedings applies (“the Insolvency Regulation”).
Permanent measures
Temporary measures
The much anticipated Corporate Insolvency and Governance Bill (the Bill) was published on 20 May 2020.
As one element of a package of measures intended to assist UK businesses with coping with economic difficulties brought about by the coronavirus pandemic, the UK government will temporarily suspend wrongful trading laws. The proposal to temporarily suspend wrongful trading laws is set out in the Corporate Insolvency and Governance Bill (the ‘Bill’), which is currently going through the UK parliament’s legislative process and is expected to be passed into law imminently.
In an effort to alleviate the impact of COVID-19 on UK businesses and encourage the supply of essential goods and services during the pandemic, the UK Government announced plans earlier this year to temporarily suspend wrongful trading laws and to fast track proposed permanent reforms to the existing insolvency regime (these reforms were developed in 2016 and consulted on in 2018).
This quick guide summarises the duties that directors of companies incorporated in England and Wales are subject to, and how those duties change when the company is insolvent or at risk of being insolvent. It also provides an overview of the personal risk to directors when the company is in financial difficulty.
This note is intended as an overview and should not be relied on as legal advice. Should you require legal advice in relation to your specific circumstances, please contact the Restructuring & Insolvency team members whose contact details are at the end of this note.
The Corporate Insolvency and Governance Bill (“Bill”) is currently going through Parliament and, if approved, will introduce wide-ranging changes to the UK’s corporate insolvency regime. The Bill includes a number of measures designed to protect businesses which are struggling as a result of the coronavirus pandemic. Some of these measures are temporary, however parliament may decide to extend these if necessary.
The key measures included in the Bill are summarised below.
Temporary provisions