On 28 March 2020 the Secretary of State for BEIS, Alok Sharma, announced that changes would be made to the UK insolvency laws to help companies "…emerge intact the other side of the COVID-19 pandemic…to give them extra time and space to weather the storm and be ready when the crisis ends whilst ensuring creditors get the best returns possible in the circumstances".
The proposed changes, extracted from the general statements made in the press conference and subsequent press release, include the following:
The press release states that "…the proposals will include key safeguards for creditors and suppliers to ensure they are paid while a solution is sought." Again we will need to assess the drafting to see what this means in practice.
There was very little detail about the proposals in either the business secretary's speech or the subsequent press release on the Government website, although the proposals for a moratorium, the protection of supplies and a restructuring plan appear to reflect the proposals made by the UK Government in 2016. Legislation will be introduced "at the earliest opportunity". As Parliament is now in recess until 21 April 2020, it remains to be seen whether the proposals will be given the careful consideration necessary to ensure that they are workable in practice and that "hard cases do not make bad law".
The City of London Law Society Insolvency Law Sub Committee and Insolvency Lawyers Association have also published a paper emphasising the usefulness and flexibility of the existing administration regime. Some of the points made are as follows:
This is a rapidly evolving area and we shall provide further briefings as and when the substance of the new proposals is clearer.