A guide, not advice. This explains how things generally work. A licensed insolvency practitioner will tell you what applies to your company or to you.
Changes to Insolvency Law and Regulation
Insolvency law and regulation evolve over time, reflecting changes in the economy, government policy, and lessons from previous crises. Staying aware of the key changes helps directors understand their obligations and options.
Our Manchester-based, ICAEW-licensed practitioners keep up to date with the latest developments and advise on how they affect businesses.
Key Areas of Change
Crown Preference
In 2020, HMRC was reinstated as a secondary preferential creditor for certain taxes (VAT, PAYE, NIC, and CIS), ranking ahead of floating charge holders but after employees. This changed the order of payment in insolvencies and reduced returns to some creditors.
The Moratorium and Restructuring Plan
The Corporate Insolvency and Governance Act 2020 introduced a standalone moratorium - giving viable companies breathing space from creditor action without entering administration - and a new restructuring plan that can bind dissenting classes of creditors.
Termination Clauses
Suppliers can no longer terminate a contract solely because a customer enters insolvency, subject to certain exceptions. This helps businesses continue trading through a rescue.
Pre-Pack Reforms
Pre-pack administration has been subject to reforms, including the Pre-Pack Pool and tighter disclosure requirements (SIP 16), to increase transparency where a business is sold to a connected party.
Statistics and Reporting
The Insolvency Service continues to publish detailed statistics on corporate and personal insolvency, helping businesses and advisers understand trends and risk.
Why These Changes Matter
Changes to the law affect:
- The options available to a struggling business
- The order of payment to creditors
- Directors' duties and risks
- The rights of creditors
Staying informed - and taking advice from a practitioner who keeps up to date - helps you navigate these changes correctly.
Speak to a Licensed IP
If you want to understand how recent changes affect your business, or are considering an insolvency procedure, our Manchester-based practitioners will explain clearly and honestly.