Restructuring Roundup (UK)

We appreciate that many of you are busy and often have limited time to think about cases, legislation or industry changes. Therefore, we plan on rolling out a short, regular update on some of the key recent developments relevant to restructuring professionals. This is our first update – more to follow.

• When will an S.236 application fail? We consider a recent court decision where a liquidators’ application for delivery up of documents failed, and reflect on how an officeholder should approach requests for company information/documents from a third-party.
• HMRC have issued several insolvency bulletins recently via R3 and the recognised professional bodies (RPBs), including:
• An update on members’ voluntary liquidations. This confirms that the cessation of clearance provisions applies to all insolvency procedures but notably gives warning to insolvency practitioners (IPs) to allow HMRC time to process returns before closing a case – or risk a report being made to the appropriate regulator! We have updated our insight to reflect this update – which includes a few other practical pointers.
• A new process for “specified charges” which means that IPs are not obliged to file preappointment returns and can just accept the specified charge.
• Dare we mention the budget? Not much to note that immediately impacts restructuring (but if you have a pension you might wish to review our Pension team’s alert). Will we see more companies in distress given, for example, rises in employer national insurance?
• The past few months have seen a flurry of cases around who a “secured creditor” is – particularly in the context of administration extensions. Cases such as Pindar and Toogood arguably raise more questions around the problem that they were seeking to resolve. To help navigate some of those unanswered questions see our Checklist for Administration Extensions.
• Something to add to the watch list are the proposed changes to collective redundancies. This recently published consultation recommends doubling or removing the cap on employee claims for failure to consult. Although this will not apply on an insolvency, it is unclear if this exemption will, for example, apply to a buyer of the insolvent business. If the exemption does not apply, there is potential for buyers to use this to their advantage and negotiate sale prices down.
• Our employment team have also produced this helpful alert on changes proposed by the Employment Rights Bill – the proposed changes to “establishment” are likely to have a practical impact on how redundancies are managed on insolvency.
• More broadly, our US team has written this insightful blog post on what constitutes consent (in the context of third-party releases in restructuring), which has relevance to those practitioners dealing with cross-border insolvencies.
• Finally, have you visited our R&I Thought Leadership Library? You will find it full of handy quick guides for restructuring professionals and directors.

If you would like specific advice on any of these issues or anything else, please contact a member of our Restructuring & Insolvency team.