News
Protection from Wrongful Trading claims to end on 30 June 2021
June 29, 2021 by Jon Law
The Corporate Insolvency and Governance Act 2020 suspended liability for Wrongful Trading as part of a series of temporary measures introduced during the pandemic.
Whilst the suspension of presentation of statutory demands and winding up petitions has been extended again until the end of September, no further extension has been provided for in relation to Wrongful Trading.
Personal liability will therefore attach to directors who continue to trade after 30 June 2021 if a subsequently appointed liquidator can establish that they knew or ought to have known that there was no prospect of the company avoiding insolvent liquidation after that point.
For more information please contact Jon Law at SWBR
New requirements for pre packaged Administration sales to come into force from 30 April 2021
March 29, 2021 by Jon Law
Under the snappily entitled ‘Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021’ an Administrator must not make a substantial disposal of a company’s assets or business to a connected party within 8 weeks of their appointment unless either:
The company’s creditors have approved of the disposal; or
A ‘qualifying report’ in respect of the making of the disposal has been obtained.
As creditor approval will, as a consequence of the Administration procedure itself, usually only be obtained some time after the Administration appointment, the second option will become the default where a pre packaged sale is being considered.
The Regulations only apply to a disposal to a ‘connected person’ such as a director or shadow director of the company in Administration or an ‘associate’ of such person or the company itself.
Much of the debate on the Regulations has focussed on the requisite qualifications for the ‘evaluator’ preparing the ‘qualifying report’. The Regulations state that an evaluator is an individual who-:
‘..is satisfied that their relevant knowledge and experience is sufficient for the purposes of making a qualifying report”
The bar would therefore appear to be set fairly low with the evaluator’s opinion of their own competence and experience being the main qualification. It is, however, also a requirement that they have suitable professional indemnity insurance in place which might provide some commercial constraints on inappropriate individuals trying to enter the market.
For more information please contact Jon Law at SWBR