R3’s Press, Policy and Public Affairs Update June 2020
03 July 2020
June saw two of the most significant pieces of legislation for the insolvency and restructuring profession passing through Parliament pretty much simultaneously - but while one of them contains much to herald, the other is far less welcome.
On the positive side, the Corporate Insolvency and Governance Act made its way rapidly through Parliament and was signed into law on 25 June. The Act will introduce a raft of new tools for the profession. R3 has been heavily involved with providing feedback on the Act, right from when it was a twinkle in a previous Government's eye, and our involvement has been recognised by numerous MPs and Peers as the Bill has been debated in Parliament. We are pleased to see that the Act's potential for adding to the UK insolvency and restructuring profession's business rescue toolbox has been noted by many politicians and members of the media, and we look forward to seeing how the tools, especially the moratorium and the restructuring plan, are put into practice by the profession. We will be providing feedback from our members on the usability of the new Act's provisions to the Government, and are pleased that all relevant departments have signalled that they are keen to get input from insolvency and restructuring stakeholders as the Act beds in.
On the thornier side, the Finance Bill is also close to making it onto the statute books, having had its House of Commons report stage on 1-2 July. The Bill contains the potentially damaging policy to grant secondary preferential status to certain types of tax debts. R3's opposition to the restoration of Crown preference has been long-standing and hard-fought, and we have been able to raise the issue's profile with numerous politicians, many of whom discussed the topic during the Finance Bill's passage through the Houses of Parliament. Our members have said repeatedly that giving HMRC a leg up in the insolvency waterfall will have a hugely detrimental effect on the ability of the profession to rescue businesses, along with other pernicious consequences for suppliers, customers, and pension schemes, who will all see lower returns.
At a time when the Government is keen to encourage measures to improve the chances of saving companies in financial distress, it seems counterproductive - to say the least - for it to undermine its own efforts in this way. We will keep on hammering this point home, but as the Finance Bill nears approval, it is unfortunately the case that the chances of getting Crown preference suspended or mitigated are receding.
The policy issues discussed above have also featured in the national and regional press, thanks to the PPP team's efforts. In recent weeks we have been contacted by journalists looking for insight on issues ranging from how the new toolkit in the Corporate Insolvency and Governance Act will change the insolvency and restructuring landscape, to the outlook for businesses and individuals.
We produced comments on the monthly insolvency figures for May, which were picked up by outlets including the Press Association, Dow Jones, the Daily Express, and The i. We also spoke to the Times about the Pre-pack Pool, and the Sunday Times about the general outlook for businesses.
Value of the Profession research
At the end of June we launched our Value of the Profession survey. We are asking our members who work in insolvency and restructuring, including lawyers and turnaround/advisory specialists, to complete this important piece of research, which will help us demonstrate the contribution that R3 members and the profession more widely make to the economy. Help us to help you, by filling in the survey and demonstrating just how much the profession does to rescue jobs, return money to creditors, advise people on their finances, and turn around struggling businesses.
If you have not received an email about the survey, and think you should have done, please email us to request a link. Thank you for your help - it will make a real difference to R3's media and lobbying work.
R3 members can provide advice on a range of business and personal finance issues. To find an R3 member who can help you, click below.