2022年1月31日

New Year, New Laws – what’s in store for 2022

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During the course of the pandemic we have seen an unprecedented level of government assistance aiming to aid businesses struggling with the effects of the pandemic. This has resulted in consistently low insolvency levels. This year we will see the lifting of certain of the restrictions and the end to some of the support initiatives that have been in place. We have outlined some of the key changes and what might be in store for 2022.

  • End of restrictions on winding-up petitions
    The current restrictions on winding-up petitions (pursuant to Schedule 10 of the Corporate Insolvency and Governance Act 2020) are due to end on 31 March 2022. The deadline can be extended for a further six months by the Government however they have given no indication that they intend to do so. The current restrictions apply a £10,000 threshold for presenting a winding-up petition and impose a requirement for creditors to seek proposals for payment from a debtor company and allowing the debtor 21 days to respond before the creditor can submit a winding-up petition. There are also temporary restrictions in place to protect commercial tenants where they have been unable to pay their rent or any other payments due under their lease where the debt is unpaid due to the financial effect of coronavirus.
  • End of protected rent-related restrictions on winding-up and bankruptcy petitions
    New laws will be introduced by 25 March 2022 on the date when the Commercial Rent (Coronavirus) Bill comes into effect. The bill will end pandemic related restrictions on landlord enforcement which has been providing commercial tenants with relief from rental payments. Pursuant to the new legislation the rent arrears will be ring-fenced and one of the parties will need to refer the dispute to an arbitrator within 6 months of the legislation coming into effect in an attempt to ensure the situation is dealt with swiftly. A landlord will not be able to petition between the date the bill comes into force, 25 March 2022, until six months later if the debt has not been referred to arbitration or, if it has, until the arbitration has concluded. The optional arbitration process applies to rent arrears that have accrued from 21 March 2020 to 18 July 2021 (England) or 7 August 2021 (Wales).
  • Director disqualification and dissolved companies
    The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 received Royal Assent on 15 December 2021 but the majority of the changes will not come into effect until 15 February 2022. The new provisions aim to prevent directors using the dissolution process to shed company liabilities to then set up a new company in the same business (often referred to as “phoenixing”) avoiding the higher costs of a liquidation process but also a potential investigation into the directors’ conduct pursuant to the Company Directors Disqualification Act 1986. The Act will allow the Insolvency Service to investigate the conduct of directors of a dissolved company without the need to restore the company to the register (as is required currently).

    If the Insolvency Service find that the director’s conduct was unfit then they may be disqualified for a period of between 2 – 15 years and may also be liable to pay compensation if their actions have caused loss to the company’s creditors.

  • First review of the Insolvency Rules 2016 “IR 2016”
    In April 2022, the Insolvency Service are to publish their report on how the Insolvency Rules 2016 are operating. This review is expected to highlight any significant gaps in the law or situations covered by the IR 2016 or areas in which the rules are thought to be contradictory or unclear.
  • The Pensions Regulator (Notifiable Events) (Amendment) Regulations 2021
    On 6 April 2022 two new obligations to notify the Pensions Regulator of employer-related events are expected to come into force. There is no carve-out from liability for Insolvency Practitioners in relation to these obligations. The new events are as follows:
    1. a "decision in principle" by an employer to sell a material proportion of its business or assets.
    2. a "decision in principle" by an employer to grant or extend certain security over its assets which will be ranked above the pension scheme on an insolvency.

    For further information on the new Pensions Regulator notification requirements for DB scheme employers please see this article by our Pensions team.

  • Outlook for CVAs in the retail sector and review of how landlords are treated
    Consultancy firm RSM has been appointed by the Insolvency Service to undertake quantitative research into how landlords are treated in CVAs in comparison to other creditors. The research is being conducted in light of concerns raised by the British Property Federation that commercial landlords are unfairly targeted by CVAs.

    There were three large-scale challenges to CVAs brought by landlords in 2021; New Look, Regis1 and Caffè Nero2 however none of these challenges were successful. The Court of Appeal is due to hear the appeal in the challenge to the New Look CVA in March 2022

  • Increase in insolvencies (particularly in the energy sector)
    The Insolvency Service statistics for December 20213 state that the number of registered company insolvencies was 1,486 which is 20% higher than in 2020 and 33% higher than in December 2019. It was also noted that there was significant increase, by 73% within two years, of companies being placed in creditors’ voluntary liquidation, with company directors choosing to close their business before the decision is made for them. During the course of 2021 the market saw a significant rise in energy company administrations and this is likely to be a continuing trend in 2022 due to the high level of wholesale gas prices.

 

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