Certainly, it will be one to remember. Many people had their second jabs and many COVID restrictions were relaxed. The weather varied from very hot to very wet, and England came second in the Euros. Significantly, all businesses could reopen – even nightclubs – and, although foreign leisure travel came back onto the agenda, most people took a staycation.
However, some business protections remained in place with the furlough scheme winding down between 1 July and 30 September. Also continuing until at least 30 September is the ban on statutory demands and winding-up petitions. Whether there will be cliff-edge as creditors react to the debt mountain built up by many businesses remains to be seen, but I would have thought it sensible for the government to promote negotiation and compromise rather than handing significant leverage to creditors long before many businesses have been able to build up cash reserves. Louis Byrne discusses the debt mountain in his contribution to this issue.
Retail, Leisure and Hospitality were amongst the sectors hardest hit by the pandemic restrictions and one of the biggest challenges for many such businesses was how to deal with landlords. At a time when CVAs and Restructuring Plans had been used increasingly successfully to cram down claims from landlords of unprofitable sites in retail, leisure or hospitality portfolios, the government offered more relief to tenants by extending the ban on commercial evictions and Commercial Rent Arrears Recovery until March 2022. The government went further by announcing a plan to introduce binding arbitration to resolve disputes over COVID-related arrears. Dominic Dumville suggests that landlords and tenants should begin negotiating sooner rather than later, seeking to reach agreement rather than allowing a solution to be imposed.
Henry Page draws attention to the threat of overtrading. Having too much work might sound like a good sort of problem to have after the activity drought of lockdown, but it can cause serious problems and is all too frequently encountered by businesses that feel the brakes have been taken off.
If a formal insolvency process has become inevitable, the preferential ranking of certain creditors comes into play. After creditors with a fixed charge of the assets and employee preferential creditors, there is a relatively new class of secondary preferential creditors, which came into being during the pandemic. Adam Seymour explains that HMRC has stepped up the pecking order to the extent of any unpaid PAYE or VAT debts. He goes on to explore how this impacts businesses wanting to go through a CVA when insolvency threatens, as they will have to act earlier to be able to use this rescue mechanism.
On a positive note, Edward Ellis writes about Freeports, which were announced in the March 2021 Budget as a plan to boost trade and recovery. Thames, Solent and Felixstowe and Harwich are freeport areas in the South and East of England, due to come into operation over the next few months.
Looking further afield, and specifically at non-UK insolvency professionals whose estates have assets in the UK, I explain what we as UK insolvency practitioners can do to assist them using the Cross-Border Insolvency Regulations 2006. This is particularly relevant for EU insolvency professionals, who can no longer invoke the EU Insolvency Regulation when dealing with the UK.
Another niche area for us is personal bankruptcy, specifically the use and misuse of deeds of trust. Dominic Dumville is our resident expert here and he explains how tenacity and an eye for detail can lead to creditors enjoying a more successful outcome than they might have feared on discovering that the bankrupt appears to hold what were thought to be his or her assets on trust for someone else.
And finally, sticking with litigation and contentious insolvency, I explain the role of an insolvency expert witness, a role that both Dominic Dumville and I undertake. Not only are we experts in our field, we are experienced in explaining relevant insolvency issues to the satisfaction of the court.
The summer of ’21 should have seen the disruption of the pandemic and the necessary life and business restrictions abate. Two inevitable consequences of that disruption are business restructuring and recovery for creditors by means of litigation. These are our comfort zones and the articles in this issue of CRS News illustrate some of what we do and how we do it. We are user friendly and love to deliver successful restructuring and insolvency solutions. Do get in touch if we can help.