From 4 May 2021 individuals will be able to apply for a moratorium that will provide a breathing space from creditor action. Our property litigation team have produced this alert considering the impact of the new regulations and what they mean for landlords.
Whilst the regulation will primarily impact those involved in residential lettings, the alert is also relevant to commercial landlords who let property to individuals.
The UK government has launched a consultation inviting views from stakeholders on options for dealing with rent debt when the existing prohibitions on forfeiture, CRAR proceedings and winding-up petitions end on 30 June 2021.
Responses to the consultation can be made here and although participation is voluntary, completing the survey will ensure that the government’s decision as to how it will manage the exit route following the expiry of the temporary measures at the end of June will reflect the interests of many, rather than the few.
Our alert sets out in more detail the information that the UK government is seeking views on, what landlords and tenants should be doing now, and how our team can help you.
Should you wish to discuss the impact of this on your business, please contact one of our team of specialists, who will be able to assist in understanding:
From 30 April 2021, an administrator will be unable to complete a sale of a substantial part of a company’s property to a connected person without either the approval of creditors or an an independent written option.
Our new alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place eight weeks of an administrator’s appointment answering questions such as:
With the UK taking positive steps towards re-opening the economy, businesses will start to see the true impact that lockdown restrictions (and the lifting of those restrictions) have on supply and demand.
The UK government has continued to support UK businesses including, most recently, extending the prohibition on winding up petitions and the forfeiture moratorium, but there are still difficult decisions that directors need to make over the coming months.
For directors, one of the most difficult challenges is ensuring compliance with their directors’ duties when making decisions about the future of the business. If the business is at risk, their own personal liability might also be at risk.
In light of the unlocking roadmap and extended support measures we have updated our business viability guide to assist directors in understanding risk and upcoming challenges: cash requirements, financial pressure points, employees, tax and directors’ duties.
The Corporate Insolvency and Governance Act 2020 introduced a number of temporary changes to UK insolvency laws last year. Those changes, together with other measures such as the moratorium on forfeiture proceedings have recently been extended, we assume, to avoid the perceived cliff edge of insolvencies that might follow if such measures are brought to an end abruptly.
As with many of the UK government announcements and legislative changes, these have been announced in a piecemeal fashion and it is not always easy to keep track of what has been extended and until when. Below is a summary of the position as it currently stands:
Further reading
You can access our quick guide to the restructuring plan here.
Following the UK Government extending the restrictions on winding up petitions until 30 June 2021 it is useful to note two recent cases that have considered the coronavirus test that currently applies to winding up petitions.
In the first case Newman v Templar Corp Ltd [2020] EWHC 3740 (Ch) heard before Christmas but only recently reported, the judge took the view that the low threshold test for determining whether coronavirus had had an impact on the financial position of the company was to be taken as settled law. For more details about that the coronavirus test and the case see our previous blog here.
With fairly swift measure the UK House of Commons approved the ‘pre-pack regulations’ confirming that, with effect from 30 April 2021, before a pre-pack sale can complete creditor approval or an independent written report from an evaluator will be required.
The detail about, the now mandatory referral process, can be found in our previous blogs.
Who will the evaluator be?
This remains one of the biggest unknowns.
The only requirements in the regulations about identify, are that the person is satisfied that they have the relevant knowledge and experience, are independent and hold professional indemnity insurance. There are a number of persons who are excluded from acting, although fairly obvious, such as those people who have been convicted of dishonesty, made bankrupt or the administrator themselves.
Although the connected person has to obtain the evaluator’s report the insolvency practitioner (IP) also has to be comfortable that the evaluator has the relevant knowledge and experience – which is likely to pose a few questions for an IPs risk and compliance team.
This should hopefully be an easy risk to manage if, as the government expects, lawyers, accountants, former members of the pre-pack pool and other IPs will take on the role but for someone outside this group, who does have the requite knowledge and experience will they (a) be able to get the professional indemnity insurance to enable them to meet the criteria to act, and (b) meet an IPs internal risk and compliance requirements. We will have to wait and see. Understanding how an IPs professional body views this role will also be key.
This is also unlikely to be the last we hear on the question of pre-packs, if unscrupulous people try to ‘game the system’ to their advantage.
Some measures have been included in the regulations to try and address concerns, such as to prevent opinion shopping, but if in practice the regulations do not address the perceived lack of transparency and creditor confidence because the rules are flexed in a way that allows unscrupulous directors and evaluators to game the system, then the government will consider whether further change is necessary, or whether pre-packs should be scrapped entirely. The latter would be disappointing, because a pre-pack is a valuable restructuring tool, and for the majority of the insolvency profession ensuring that remains an option for business rescue will be important.
The Government has issued a consultation paper regarding statutory audits and financial reporting. The consultation makes proposals in relation to four areas, namely directors, auditors and audit firms, shareholders and the audit regulator. We have previously summarised the proposals impacting the purpose and scope of an audit.
This post will focus upon the matters affecting directors’ duties, and how the proposals may interact with the existing frameworks and enforcement powers that are in play when a company enters into an insolvency process.
For the past year, many Australian businesses, ranging from very significant publicly listed corporations, to much smaller family businesses, have benefited from public and private relief measures intended to soften the impact of COVID-19. Although those measures were introduced as a direct result of pandemic-related concerns, the economic reality in many sectors was already uncertain and many businesses were facing challenges. The pandemic accelerated and increased the operating and trading pressures. In this alert we consider the potential examination and prosecution risks for directors and third parties.
HMRC expect all UK taxpayers to pay the tax they owe, in full and on time, whenever they are able to do so. However, in circumstances where a taxpayer is unable to meet its liability, HMRC are able to exercise a discretion to allow the taxpayer to pay tax after the due date, over an agreed period, and without incurring late payment penalties. This is known as ‘Time to Pay’ (TTP). The primary purpose of TTP is to assist HMRC collect taxes due efficiently and effectively. It is worth emphasising that there is no right for taxpayers to be granted TTP.
TTP agreements have offered essential support to UK businesses during the COVID-19 pandemic, however as restrictions lift, and Government support comes to an end, how HMRC respond to requests for additional or ongoing support could be critical to the future survival (or not) of many businesses. Coupled with the fact that HMRC now has preferential status if a business enters formal insolvency, will this tip the balance between business support and tax recovery? Of course we hope not, but HMRC holds the trump card and we will be monitoring how it chooses to play this over the coming months.
This alert considers what a TTP arrangement is, the considerations HMRC take into account when entering one, and how TTP is monitored and can be brought to an end.
