While announcements have been made, and measures extended, to help corporate Britain, directors faced with the difficult decision of whether to trade on through the crisis could suddenly very exposed once again.

When someone dies, it is not always clear whether or not their estate is insolvent. It can take time, particularly with complex estates, for assets and liabilities to be identified and claims by creditors to be brought. Personal representatives (“PRs”) and their advisors need to be alive to the prospect of an estate being insolvent and take action swiftly to ensure their financial exposure is minimised and consider how best to administer the estate for the benefit of estate creditors rather than beneficiaries.

The Corporate Insolvency and Governance Act came into force on 26 June 2020 introducing a number of reforms aimed at providing protection to companies in financial distress, particularly as a result of the COVID19 pandemic.

However, the reforms present a number of potential problems to suppliers. Specifically, a permanent provision has been added to the Insolvency Act 1986 which:

The new UK Corporate Insolvency and Governance Act (CIGA), which took effect in June 2020, ushers in permanent changes to the English insolvency and restructuring landscape as well as temporary, and largely retrospective, measures to help mitigate the economic impact of the COVID-19 pandemic.

The three permanent additions are:

We now have major new legislation – the Corporate Insolvency and Governance Act 2020 (“CIGA”) – to sit alongside existing tools and processes for restructurings and insolvencies. As litigators, we anticipate how its use may play out in contentious restructurings.

The focus on Modern Methods of Construction, or MMC, sharpened throughout the COVID-19 pandemic, with many wondering whether the outbreak and the consequential delays to existing construction projects would propel MMC forward as the future of construction.

InTelnic Ltd v Knipp Medien und Kommunikation GmbH [2020] EWHC 2075 (Ch), Sir Geoffrey Vos sitting in the English High Court ruled that where a debt is governed by an arbitration agreement, it is appropriate for the Court to stay or dismiss a winding up petition without investigating whether the debt is disputed in good faith and on substantial grounds.

This case provides guidance on the high threshold a creditor will have to cross in order to be able to present a winding up petition for sums due under an agreement with an arbitration clause.

In the recent case of Re Rhino Enterprises Properties Ltd & Anor [2020] EWHC 2370 (Ch) the court held that it was at least strongly arguable that a company voluntary arrangement (a “CVA”) was not a contract for the purpose of s.1(1) of the Contracts (Rights of Third Parties) Act 1999 (“the C(RTP)A”).

The case of Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd (Bresco) saw the TCC and the Court of Appeal agree that insolvent referring parties should not reap the rewards of adjudication. In fact, the TCC said that a referring party facing an adjudication brought by an insolvent party could even get an injunction to restrain that referral.

The statutory provisions for Restructuring Plans form a new Part 26A of the Companies Act 2006. CIGA was brought into force on June 26, 2020 and at a hearing in the High Court in London on September 2, 2020, the plan proposed by Virgin Atlantic, which was the first to be brought before the courts, was sanctioned.