Four takeaways from the 2023 Contentious Insolvency and Creditors Forum

25 July 2023

At the beginning of July, R3 welcomed delegates to the annual Contentious Insolvency and Creditors Forum in London.

From hot topics in contentious insolvency to dealing with debtors that won’t pay, this one-day conference was filled with great sessions and a number of insights – we’ve summarised some of them in this blog…

1.       The Prezzo ruling could help future restructuring plans

In a session on hot topics in contentious insolvency, a panel of experts discussed the Prezzo restructuring plan which was approved on July 5^th 2023.

This case allowed unsecured creditors to receive no compensation, establishing a departure from conventional jurisdiction, and overall helped to provide more clarity on how restructuring plans can be used moving forward.

This case was also notable as it marks the first instance of HMRC's challenge being dismissed since Re Nasmyth and Re GAS, where HMRC's challenges were upheld. The Judge rejected HMRC's argument that the court should not entertain the approval of a Plan without discharging preferential liabilities owed to HMRC during the plan's development and proposal period.

The Judge also determined that the distribution of benefits under the Plan was fair and aligned with the priority order for creditor payments in the event of administration.

2.       Mental health remains front of mind

Mental health can significantly impact personal insolvency – whether debt concerns are a symptom of mental health or mental health becomes a concern once someone has fallen into debt.

On a session focusing on issues within personal insolvency, Rachel Sleeman, a Barrister at Fiver Paper, discussed recognising the importance of addressing this intersection and the various regulatory avenues that can assist individuals facing debt issues while also dealing with mental health problems.

One key takeaway was a reminder of the importance of finding the right balance between the debtor and the creditors. Collaboration and understanding from both parties are key, with debtors taking proactive steps by seeking advice to develop a sustainable repayment plan, while creditors can play a supportive role by showing empathy and flexibility, and considering alternative repayment options that accommodate the debtor's mental health needs.

By working together, debtors and creditors can find a compassionate and practical balance that alleviates financial burdens while prioritising mental well-being.

3.       Funds may be hidden in the fine print

In a session on how to handle a situation where a debtor won’t pay, a scenario was given to the audience where fraud was suspected to have occurred.

While in the scenario the debtor had committed fraud, all angles were considered and the main takeaway was not to cut corners in your fact-finding and to gather as much evidence as possible.

While it may sound obvious that you’ll need evidence to prove your case, it must always be remembered that in some situations, it may appear fraud has occurred but this could be incorrect – and in instances where it is, the burden of proof is on the prosecution.

4.       Collaboration remains key

At the end of the conference, it was refreshing to hear a different perspective in a session that brought together a range of creditors to understand their view of insolvency and the profession.

The key takeaway from the session was the greater need for collaboration and communication between creditors, debtors and insolvency professionals. It’s important that there is more dialogue and greater transparency between creditors and IPs during an insolvency process, as this can lead to better outcomes for all parties. One creditor on the panel spoke about her experience with insolvency practitioners, having previously not understood what was happening during the insolvency process or why it was happening. But with more transparency, she felt better prepared for future cases.

An interesting observation to close our second Forum with. Thank you to everyone who attended this year – speakers, sponsors and delegates.