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HMRC as preferential creditor

HMRC as preferential creditor

From today HMRC will become a secondary preferential creditor in insolvencies (corporate and personal) placing it ahead of the ordinary creditor. The provisions can be found within the Finance Act 2020 at page 79, Part 4, Miscellaneous and Final, Insolvency, HMRC debts: priority on insolvency. “Schedule 6 ‘The Categories of Preferential Debts’ of the Insolvency Act 1986, has been amended. From 1 December 2020 certain HMRC debts will fall within the categories of preferential debts. However, these debts will rank at the bottom of the ladder of these type of debts. All other preferential debts listed in schedule 6 must be paid in full before HMRC are to receive a distribution under its new but clearly the advantages to HMRC are substantial. We wait to see how the amendments work in practice but the likelihood is that secured lenders will have to reconsider the extent of their lending and the nature of… Read more


The Finance Act 2020 and insolvency

The Finance Act 2020 and insolvency

The Finance Act 2020 introduced new provisions concerning tax in insolvency situations  in two respects. The first amends the Insolvency Act 1986 (and its equivalents in Scotland and Northern Ireland) to restore HM Revenue & Customs (HMRC) as a secondary preferential creditor in insolvency proceedings with effect from 1 December 2020… Read more


The Government's report on pre pack sales

The Government's report on pre pack sales

The Government's report on pre pack sales has now been made available   In summary it clarifies that there are still concerns  over  sales to connected parties and the workings of SIP 16. Over a third of sales were for less than market value. At least 1 in 5 SIP 16… Read more


CIGA Update

CIGA Update

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Early Termination of Certain Temporary Provisions) Regulations 2020 came into force on 1 October 2020. The following regulations are extended 1. The temporary exclusion for small suppliers from the provisions of s233B IA 1986 (Protection of supplies of goods and services) (inserted by… Read more


The Finance Act 2020 receives Royal Assent

The Finance Act 2020 receives Royal Assent

The Finance Act 2020 received Royal Assent on the 22 July, confirming the government’s intention to restore HMRC as a secondary preferential creditor on insolvency. From 1 December 2020 HMRC’s claim will sit ahead of floating charge holders and unsecured creditors reducing the monies available for other creditors in an… Read more


Guidance on lodging and admitting proof of debt

Guidance on lodging and admitting proof of debt

The case of Re  Rochay Productions Ltd [2020] EWHC 1737 (Ch) provides useful guidance to those both lodging and admitting proofs of debt at creditors meetings.   Opus Art Limited brought an application to the court challenging the admission of a proof of debt lodged by Rochay Elite Limited at… Read more


Case Law Update: Manolete Partners plc v Ellis

Case Law Update: Manolete Partners plc v Ellis

The decision in Manolete Partners plc v Ellis has recently been published here   https://www.bailii.org/ew/cases/EWHC/Ch/2020/1674.html   The decision deals with and provides a review of wrongful trading, preference and transactions at an undervalue and also touches upon directors duties. It is interesting due to the fact that two of the… Read more


Corporate Insolvency and Governance Bill introduced to Parliament

Corporate Insolvency and Governance Bill introduced to Parliament

On 20 May 2020 the Government introduced the eagerly anticipated Corporate Governance and Insolvency Bill to Parliament. The Bill aims to provide greater protection for businesses during and following the COVID-19 crisis. If the bill is enacted in its current form the bill would offer businesses breathing space to consider… Read more


Protective measures for commercial tenants

Protective measures for commercial tenants

On 23rd April the Business Secretary Alok Sharma set out measures aimed to protect high street shops and other companies against aggressive rent collection. The use of statutory demands made between 1st March 2020 and 30th June 2020 and winding up petitions presented from 27th April 2020 and 30th June… Read more


Ministers consider further changes to the Insolvency Rules

Ministers consider further changes to the Insolvency Rules

Further radical changes to the insolvency rules are being considered by ministers.   Schemes of Arrangement appear to be set for a radical overhaul allowing vulture funds (distressed debt investors) to overrule high-ranking creditors, such as traditional banks, if judges can be persuaded that it was in the best interests… Read more


Temporary Insolvency Practice Direction comes into force

Temporary Insolvency Practice Direction comes into force

The Temporary Insolvency Practice Direction (“TIPD”) came into force on 6th April 2020 and will remain in force until 1st October 2020. The purpose of the TIPD is to assist the court during the COVID-19 pandemic, trying to remove the need for parties to attend court in person and to make provisions… Read more


Business Secretary announces supportive measures

Business Secretary announces supportive measures

The Business Secretary Alok Sharma has announced new insolvency measures to support businesses under pressure as a result of the coronavirus outbreak. The Government will amend insolvency law to give companies breathing space and keep trading while they explore options for rescue and temporarily suspending wrongful trading provisions retrospectively from… Read more


COVID-19 Update

COVID-19 Update

We will continue to operate as normal during the Coronavirus pandemic . This virus spread represents uncharted territory for many – we continue to keep the situation under review, setting our operational policies and activities in line with government and medical advice. Rest assured that we will continue to support… Read more


Insolvency appointments on the rise

Insolvency appointments on the rise

The UK Insolvency Service has just released its quarterly statistics for October- December 2019 which show that insolvency appointments in liquidations and administrations in 2019 were at levels higher than for five years. Construction and support services are the areas of the highest number of appointments, followed by the wholesale, food and… Read more