The Insolvency Service newsletter Autumn 2020

Web Version | Update Preferences | Unsubscribe

Twitter Share

Autumn 2020


Independent scrutiny of connected party pre-pack sales to be made mandatory


The Government has announced it will bring forward new laws requiring mandatory independent scrutiny of pre-pack administration sales where connected parties - such as the insolvent company’s existing directors or shareholders - are involved in the purchase. The move is intended to improve confidence and transparency, giving the general public and creditors reassurance that their interests are being protected alongside those of the distressed business.

Minister for Climate Change and Corporate Responsibility Lord Callanan said “This government is committed to creating a transparent and fair insolvency framework, and helping distressed businesses explore all options to get themselves out of trouble. Pre-pack sales are a really useful tool to help save troubled, but viable, businesses, and play a critical role in helping to protect our economy and preserve livelihoods.

“As the UK continues to tackle Covid-19 it is more important now than ever that people can take confidence in the insolvency process. Connected parties such as existing directors or shareholders who know the company well can be ideal buyers. But in the rush to secure a sale, creditors’ needs should not be forgotten. The new law we are introducing will ensure such deals are properly scrutinized, to help balance the interests of everyone involved.”

Draft regulations which would mandate compulsory scrutiny of pre-pack sales to connected parties have been published and comment is invited on them until 5 November 2020. The announcement came alongside the publication of a review to assess the impact of voluntary industry measures introduced in November 2015 to improve the transparency of pre-pack sales.

New chair for Insolvency Service Board sought

The Insolvency Service is seeking applications from experienced and qualified professionals to take up the position of chair of our Board from April 2021.

The Board comprises a mix of executive and non-executive members and is responsible for oversight of the operation of the Insolvency Service, with particular emphasis on its strategic direction, management controls, and corporate governance. It is currently finalising a review of the agency’s strategy which is expected to be completed in early 2021.

The current chair, solicitor, licensed insolvency practitioner and credit, debt and insolvency specialist, Steve Allinson was appointed to the Board in 2015 and to the role of chair in 2017.

Steve Allinson said “the Insolvency Service plays a critical role in ensuring we have a well-functioning insolvency regime in the UK which is so crucial to ensuring economic confidence. Our work has been particularly important through the current economic challenges the country is facing.

“The Board’s job is to support its leadership team to drive performance, modernise services and reform the UK’s framework to ensure it maintains its high international standing. Our current work to complete the review of the agency’s strategy will ensure it is in the best place to do this into the future.

“It is a privilege to lead the board and I am grateful to have held this role for this period and throughout what has been a critical time for the agency. The recruitment of a new chair provides a real opportunity for an individual with excellent networks and strong analytical skills to provide ongoing leadership and advocacy and to oversee the new strategy which we are bringing to fruition.”

Applications for the chair’s role close on 22 November 2020 at 23:00.

Registrations open for Insolvency Live! 2020

Insolvency Live!

Insolvency Live! 2020 is taking place online on Tuesday 24 November 2020.

Insolvency Live! is our annual conference for professionals across the insolvency and debt advice sector. This year we have a full day of plenary sessions and workshops which you can join online. This includes our guest speaker Jennifer Marshall, Partner at Allen & Overy and Chair of the Insolvency Subcommittee of the City of London Law Society who will be speaking about her experience of using the recently passed Corporate Insolvency and Governance Act 2020 to rescue companies affected by COVID-19. Other sessions include a Q&A panel with our Chief Executive Dean Beale and members of the executive leadership team, and workshops for money advisors on working with Official Receivers and the Debt Relief Order team.

Contact Stakeholder to receive full details of the event and how to book.

Extension of temporary measures introduced by the Corporate Insolvency and Governance Act 2020

The Government has made regulations extending a number of temporary measures introduced by the Corporate Insolvency and Governance Act 2020, which were due to expire on 30 September 2020.

The newly extended measures are:

  • companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold them (and other general meetings) by electronic means until 30 December 2020 (extended from 30 September), so they can comply with social distancing measures. Shareholders’ and members’ rights to vote on important issues remain unaffected
  • statutory demands and winding-up petitions will continue to be restricted until 31 December 2020 (extended from 30 September) so as to protect indebted, but otherwise viable, companies from aggressive creditor enforcement action where coronavirus has affected their ability to pay
  • termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. However, small suppliers will continue to be exempted from the obligation to supply until 30 March 2021 (extended from 30 September 2020) so that they can protect their business if necessary
  • modifications to the new moratorium procedure that ease access to the procedure, which give companies breathing space from their creditors whilst they seek a rescue. And the temporary moratorium rules will also be extended until 30 March 2021 (extended from 30 September).

This is additional to measures announced on 16 September 2020 which extend support to stop business evictions until the end of the year, providing commercial tenants with greater security and protecting vital jobs.

Further guidance from the Government published earlier in the Summer is also available online:

Insolvency Service blog

Insolvency blog

There are new posts on the blog highlighting how we as an organisation work to break the stigma surrounding mental health issues and our recent successes in confiscating the proceeds of crime.

Recent enforcement successes

Our work to tackle financial wrongdoing is core a plank in our strategy to deliver confidence in the UK economy. You can read about the enforcement action we have taken where we believe corporate or personal insolvency procedures have been abused or companies are acting against the public interest on our website.

Cases recently completed include:

  • a 7-year director disqualification for Alexander Nix of SCL Elections Ltd, which traded as Cambridge Analytica, for causing or permitting the company or associated companies to market themselves as offering potentially unethical services to prospective clients; thereby demonstrating a lack of commercial probity
  • a 14-year extension to the normal 1-year bankruptcy restrictions handed down to Michael Stanley who ran a horse betting syndicate which provided false information to its more than 6,000 investors and owed them over £50m when it closed
  • 9-year disqualifications for Gateshead husband and wife directors of an events and promotions business which submitted 6 years of false tax returns prior to the company’s liquidation leaving an unpaid tax debt of £146,000
  • 8-year director disqualification for the director of a Scottish-based motorhomes company after guaranteeing return prices to customers for their vehicles which could not be met
  • 14-year disqualification for a holiday parks boss after investors were owed more than £19 million in failed investment scheme

Edit your subscriptions | Unsubscribe

Twitter Share