As the global Coronavirus pandemic continues to impact all aspects of society, LPC Law has collated the following summary of some of the key developments within the legal sphere, which impact upon clients, advocates and other stakeholders.
New Insolvency Bill
On 20 May 2020, the UK Government introduced the Corporate Insolvency and Governance Bill, aimed at easing the pressure on businesses and preventing a large number of companies from becoming insolvent. The Bill proposes 6 insolvency measures and 2 corporate governance measures. Perhaps the most pertinent of these are:
- A 20-business-day window (extendable to 40 days) in which a company can consider a rescue plan, during which it remains under its directors’ control, and cannot be pursued for any debts by its creditors
- A temporary prohibition on creditors from filing statutory demands made between 1 March 2020 and 30 June 2020 (voiding them) and voiding winding up petitions for debts presented from 27 April 2020 to 30 June 2020
- Retrospective effect to the temporary measures so that they can be back-dated to the onset of the economic downturn brought on by the virus
- Relaxing the requirement for companies to hold closed or in-person AGMs, extending deadlines for the filing of accounts and other documents required by Companies House
- Temporarily suspending the operation of termination clauses which are triggered by insolvency, so as to avoid suppliers from cutting supplies whilst a company is undergoing a rescue process under the Bill
FCA Guidance for Mortgage Lenders
On 22 May 2020, the FCA published updated draft guidance for mortgage lenders with an expiration date of 31 October 2020. The guidance is built upon Principles 6 and 7, as well as MCOB paragraph 2.5A.1R. Notably, the guidance extends the period of mortgage forbearance until 31 October 2020, including an instruction not to commence or continue repossession action. Where a possession order has already been obtained, firms are told they should refrain from enforcing it. The guidance also sets out the steps which firms should take once any agreed payment ‘holiday’ or deferral period has ceased, which is contingent upon whether the borrower is able to resume full payments thereafter or not.
Whilst CPR PD 51Z, which provided for a 90-day stay on enforcement action (until 25 June 2020) within possession proceedings, has not been formally extended since it came into force, paragraph 1 of the Practice Direction continues to have effect until 30 October 2020. It is anticipated that the stay on possession proceedings may be elongated by the Rules Committee, to bring it into harmony with the FCA’s updated guidance.
Courts Discussing Resumption of Possession Lists
A number of discussion groups have been created across the jurisdiction, to establish practical steps necessary for the future re-starting of hearings which have been temporarily suspended - most importantly, possession-based lists. The approach is yet to be harmonised across England and Wales as a whole, and has been emerging on a regional basis, often coordinated by the Designated Civil Judges for certain regions of the country.
The views of panel solicitors’ firms have been canvassed and expressed. A number of lenders are still yet to decide their approaches, given their awaiting of the latest guidance from the FCA.
Amongst the pragmatic considerations being reviewed and ventilated, court users and judges have been grappling with the possibility of staggering lists roughly 2 or 3 per hour and hearing cases remotely by telephone. Another alternative approach has been to list matters to be heard in person, whilst observing social distancing guidelines, by minimising or eliminating any close contact between parties and the judge.
A number of court offices remain open and fully staffed, and several judges continue to sit (sometimes remotely) and hear numerous types of civil matters, from interlocutory applications to final hearings lasting several hours. LPC Law continues to accept instruction to attend remote hearings, via all the various means currently being used by the courts across the country.