R3’s Press, Policy and Public Affairs update, March 2021
08 April 2021
March started off with an event of great interest to R3's Press, Policy, and Public Affairs team, and to R3's members, in the shape of the Chancellor's Budget speech. We had hoped that Rishi Sunak would use the occasion to set out the detail of how and when the various support schemes, which have kept countless companies afloat since the onset of the pandemic, would be withdrawn, but were left disappointed.
However, later last month the Government did announce further extensions to the temporary insolvency measures which it had included in last year's Corporate Insolvency and Governance Act, among them restrictions on the issuing of statutory demands and winding-up petitions. Our press comments urged directors of companies which have been pushed into financial distress to use the extra time as an opportunity to seek meaningful and qualified advice about their options, in order to get the best possible outcome for their business.
Pre-packs were once again on the agenda for the insolvency and restructuring profession in March, with the new regulations on connected party sales in administrations being passed into law. As our post sets out, all sales of businesses or substantial assets of an insolvent company to a connected party, such as a director or company owner, which take place within eight weeks of the beginning of the administration process, will now need the purchaser to seek an independent review of the sale's appropriateness from a third-party 'Evaluator', or the approval of the company's creditors.
We have reservations about how the process will work, and whether the Government has brought in sufficient oversight for the Evaluator role, which were raised in the House of Lords during a debate on the new regulations by Lord Foulkes and Lord Lennie. With the regulations coming into force on 30 April, we will welcome views from members on how they are working in practice.
March 8 was International Women's Day, and we were proud to organise an event to mark the day with guest speaker Dr Pippa Malmgren, an economist, entrepreneur, and author. On the same day, we also launched an exciting new project in conjunction with the Insolvency Service, to look at diversity and inclusion issues within the insolvency and restructuring profession. A steering group has been convened, and will look at current levels of diversity within the profession, potential barriers to entry and career progression for people from marginalised groups, and what can be done to reduce or remove these obstacles.
As R3's Director of Technical & Education, Caroline Sumner, noted at the project's launch, "Ensuring that the talent pool for insolvency and restructuring professionals is as deep as possible will enable us to better represent the diverse communities we serve".
Finally, from a policy perspective, March also saw the announcement of a consultation from the Pensions Regulator into how it will use the new criminal sanctions it has been granted under the Pension Schemes Act for "those who avoid employer debts to pension schemes or put savers' pensions at risk", and of a call for evidence from the Insolvency Service for a review of the Insolvency (England and Wales) Rules 2016. We will consult with members, and respond to both of these reviews on the profession's behalf.
In the news - pre-packs and insolvency measures extension
As the regulations on connected party sales in administrations made their way through Parliament, R3 President Colin Haig was quoted in the Times, voicing the profession's concerns that the Government has not put in place stringent enough rules around who can set themselves up as an Evaluator. After the regulations were passed, R3 Vice-President Christina Fitzgerald summed up in the same paper worries from the insolvency and restructuring community that lack of oversight of Evaluators could end up undermining confidence in the reforms, and in pre-packs more generally.
In the regional and trade press, meanwhile, our comments on the Budget were picked up by outlets including the Blackpool Gazette and Credit Connect, while our statement on the insolvency statistics in England and Wales in February was featured in the Southern Daily Echo and the Lancashire Evening Post, among others.
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