Insolvency Made Clear: A Guide for Debtors

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Preface: the effects of the pandemic This book was written and is being published during the Covid-19 pandemic. The pandemic affects this book in three ways. Firstly, and most importantly, through an increase in the number of people and companies going insolvent. The Office of National Statistics estimated that there was a 10% fall in GDP in 2020, and the central forecast of the Office of Budget Responsibility in March 2021 predicted that the rate of unemployment will peak at almost double its pre-pandemic level. The impact will not be felt evenly throughout the economy: companies and people working in certain sectors, such as accommodation and food services, are forecast to be most affected. To some degree, the country has been protected from the impact of the recession through Government spending on schemes like the Coronavirus Job Retention Scheme and Local Restrictions Support Grants. This has allowed the private sector to repay its creditors using public funding. However, as the United Kingdom returns to ‘the new normal’ and the emergency funding stops, some debtors will be unable to repay their debts. Creditors will consider bankruptcy and winding up petitions as a means of seeking a return on their debts when other means fail. Secondly, the Government has made changes to English insolvency law in response to the pandemic, sometimes with retroactive effect. The law might have changed following publication of this book. The most likely candidates for change are the rules for possession proceedings, the presentation of winding up petitions, and the application of wrongful trading provisions. These rules have already changed more than once since March 2020. If the law does change, it is likely to be more generous to debtors as the Government seeks to provide short term protection while the economy recovers from the pandemic. Finally, this book presents insolvency statistics to offer context to the rules it describes. Statistics from 2020, where they are available, are likely to mislead: neither the court nor creditors acted in the same way from March 2020 as they did in 2019. In particular, there are presently restrictions on putting a company into compulsory liquidation (see Chapter 13) and, although there are not similar restrictions on bankruptcy proceedings, many creditors are avoiding insolvency proceedings. HMRC, for example, has permitted the deferment of VAT and income tax payments, and it did not petition for bankruptcy or winding xix
Insolvency Law Made Clear – A Guide For Debtors up orders unless it suspected criminal activity. As a consequence, there were relatively few bankruptcy and winding up orders made in 2020. For example, in November 2020 the number of personal and corporate insolvencies was down by about a third from November 2019. This book presents figures from before the pandemic in order to be more representative of how the system operates. This book seeks to state the law as of March 2021. xx
Page 1 and 2: INSOLVENCY LAW MADE CLEAR A GUIDE F
Page 3 and 4: Published June 2021 ISBN 978-1-9163
Page 6: Acknowledgments I owe special thank
Page 9 and 10: Insolvency Law Made Clear - A Guide
Page 22 and 23: Legal terms defined ‘The Act’:
Page 24 and 25: Legal Terms Defined A ‘dispositio
Page 26 and 27: Legal Terms Defined a bankruptcy or
Page 28 and 29: Legal Terms Defined A ‘third part
Page 30 and 31: Introduction and aim of this book T
Page 32 and 33: Introduction And Aim Of This Book A
Page 34: Part 1 BANKRUPTCY The next few chap
Page 46 and 47: Chapter 2 Effect of bankruptcy This
Page 48 and 49: Effect Of Bankruptcy will only choo
Page 50 and 51: Effect Of Bankruptcy Box 5: HOW MUC
Page 52 and 53: Effect Of Bankruptcy by giving noti
Page 54 and 55: Effect Of Bankruptcy the seller goe
Page 56 and 57: Effect Of Bankruptcy The judge held
Page 58 and 59: Effect Of Bankruptcy Finally, the f
Page 60 and 61: Effect Of Bankruptcy to have an awk
Page 62 and 63: Effect Of Bankruptcy 2.10 Running t
Page 64 and 65: Effect Of Bankruptcy although it is
Page 66 and 67: Effect Of Bankruptcy either volunta
Page 68 and 69: Effect Of Bankruptcy 2.16 Investiga
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Effect Of Bankruptcy ‘privileged
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