Search

How can we help?

Icon

Restructuring and Insolvency – what to expect in 2023

The flurry of economic forecasts over the last few months may reach slightly different conclusions but none give much scope for encouragement.  With no sign of the pressure points of high inflation, interest rates and energy prices abating, we look at three things the coming year might bring from an insolvency perspective.

Directors’ duties

Directors’ duties have twice come under the spotlight of the Supreme Court in recent months, in the cases of BTI 2014 LLV v Sequana SA and Stanford International Bank Ltd v HSBC.  In a nutshell, the Court confirmed the existence of a common law duty for directors to have regard to the interests of the company’s creditors when it is insolvent or bordering on insolvency.  These interests must be given appropriate weight depending on the actual, developing financial position of the company.  Even within the Supreme Court over the course of the two decisions there was some disagreement as to the precise extent and applicability of the duty and it is likely that the practical effect of the duty will be subject to further argument in subsequent claims.

Bounce Back Loan Scheme

£47.4bn was lent to 1.56 million enterprises under the Bounce Back Loan Scheme as part of the Covid support package to SMEs and micro-businesses.  The loans have been subject to allegations of fraud, which is estimated to prevent repayment of £17bn of the loans.   Examples of this include applying the loan monies for personal rather than business use and exaggerating or misrepresenting the business’ financial position.  There have already been multiple arrests and the Insolvency Service has imposed various bankruptcy limitations and director disqualifications.  These actions are expected to continue, in parallel with which the HMRC has recently launched an investigation.  The major bank are also gearing up to take action to recover misappropriated loans, although the economics of taking action to recover loans of £2,000-£50,000 may be challenging.

 

 

There have already been multiple arrests and the Insolvency Service has imposed various bankruptcy limitations and director disqualifications.

CIGA review

The pandemic also saw the introduction of the Corporate Insolvency and Governance Act, which brought about various reforms to insolvency law.  The Insolvency Service has recently reported on the mixed success of these measures.  Further tweaks may be expected to increase their effectiveness.

The Insolvency Service is continuing its review of the creditors’ voluntary liquidation process.  Issues under consideration include liquidators’ remuneration and the adequacy of notice periods given to creditors.  More news on this is likely in 2023.

About this article

Disclaimer
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

About this article

Read, listen and watch our latest insights

art
  • 01 June 2023
  • Employment

Facts employees should know about their personal data

We previously published an article on facts an employer should know about holding personal data, so it is only fair that we also write about the other side of the coin – facts employees should know as individuals whose personal data is held by their employer.

art
  • 26 May 2023
  • Employment

Avoiding discrimination in flexible working requests

The right to request flexible working is currently available to employees with at least 26 weeks’ service and is set to be extended further under new Government reforms.

art
  • 25 May 2023
  • Employment

Carer’s Leave Bill set to become law

On 19 May 2023, the Carer’s Leave Bill had its third reading in the House of Lords, and upon receiving Royal Assent, will become law. There is not yet a date for the implementation of this bill, however it is likely that this will happen relatively quickly upon receiving Royal Assent, so is definitely one to keep an eye on.

art
  • 16 May 2023
  • Employment

10 facts an employer should know about holding personal data

Personal data is any information that can be used to identify an employee.

art
  • 11 May 2023
  • Employment

Employment Law Changes – Spring 2023

The government has just announced that it plans to scrap the Sunset Clause, which would have revoked almost all retained EU law at sunset at the end of 2023.

art
  • 10 May 2023
  • Employment

Reasonable adjustments for mental health in the workplace- FAQs

Acas has recently released guidance for employers and employees on reasonable adjustments for mental health in the workplace.