By Roger Rubin
Some key take-aways from the new Corporate Insolvency and Governance Bill 2020 which emerged yesterday, almost a month after the intention to provide some assistance was first announced.
It contains some “meat on the bones” in relation to the headlines previously promoted, as well as a few novelty points.
I highlight the following:
- Companies not individuals – Restrictions on presenting Winding Up petitions will cover, not merely hamper landlords of commercial tenants, but ALL creditors. The position for individuals is not yet addressed.
- Retrospective – The new provisions will be retrospective and will even affect Orders already made, in certain circumstances – rendering certain winding up orders already made, void.
- No advertisements – Any active petition cannot be advertised unless and until the court has determined key questions relating to the relationship between the debt and Covid-19. Plenty of litigation ahead as to the meaning of the creditor’s “reasonable grounds for believing” the circumstances it relies upon as to nature and scope of the liability. Another layer of cost and delay – with great uncertainty for months ahead, I suspect.
- Further Court tests – Even if a creditor passes that hurdle, the Court can still refuse to make an Order if “the court is satisfied that the facts by reference to which that ground applies would have arisen even if coronavirus had not had a financial effect on the company”. Another hurdle, with plenty of scope for argument!
- Wrongful trading There are rules effectively setting aside the “wrongful trading” provisions on Directors, in certain circumstances- although this won’t affect other statutory and other duties of directors of struggling companies.
- Moratorium for restructuring – There is to be a new moratorium to allow for certain “restructuring”.
The provisions are detailed and all the consequences are being considered. This is the first text of the Bill, and it doesn’t necessarily follow that the Final statute will look the same.
We are keeping a very close eye on developments, so our advice and assistance, is accurate and up to the minute!
For sensible, practical and detailed up to date and accurate advice, delivered in a user friendly and down to earth manner feel free to contact Roger Rubin who is a Senior Consultant in our Commercial Ligitation Team.