The position has changed again since the High Court said last week that all winding up cases were being adjourned.
We have now been notified that the Insolvency & Companies Court is intending to progress winding-up cases remotely where possible. Audio and video will be used for hearings, and an automated email will tell interested parties how to participate and what steps are needed beforehand. For a listed hearing, applicants, respondents and claimants will need to contact the court as soon as practicable to request adjournment or a remote hearing.
Validation Orders may be changing too, and businesses need to be prepared for these if required. These orders apply when payments have already been made to a creditor, prior to winding up, without the creditor seeing that a Petition has already been issued. Monies are then payable back to a liquidator under normal circumstances, unless a Validation Order is granted. The court’s view will be a deciding factor, with the debtor (e.g. utility) having possible grounds for claiming that actions were taken in order to keep a company trading during the coronavirus crisis.
We are also monitoring for any increases in winding-up threshold and statutory demand period. A cautionary note comes from Australia, where a minimum 20k debt is now required for a winding-up Petition and the statutory demand period has been extended to six months.
We are, of course, managing the changes in circumstances, and will update further as the situation evolves further.
Note that temporary Practice Direction 51Y (PD) applies to remote hearings during the coronavirus pandemic.
Details on arranging hearings can be found here.
How we can help
Creditor services is continuing to monitor the market for signs of distress. This is a critical source of support for those who are facing almost unprecedented uncertainty around business and credit risks.
Our tracker and PRM technologies are well placed both to protect portfolios and to alert you to important events. We will be providing on an ongoing basis early warnings of issues affecting ability to trade or pay.
If you’re affected by these issues and would like to discuss your situation, please contact Keith Marshall.