Exceptional expertise & experience
For anyone facing financial difficulty, it is essential to have access to a source of knowledge and legal support. We can help. We are the only firm of solicitors in Northern Ireland to have two licensed Insolvency Practitioners. This makes us unique and has shaped our unrivalled expertise in this area.
We offer a range of specialist services and are renowned for our work in bankruptcy and insolvency. We represent debtors, creditors, companies and their directors as well as Insolvency Practitioners on a daily basis in the High Court.
We regularly provide training to other solicitors, barristers, law students and debt management agencies on this very niche area of law.
Specialist expertise – at a glance:
- Creditors’ Bankruptcy Petitions
- Directors’ Disqualification Proceedings
- Individual Voluntary Arrangements
- Advice on Asset Realisation
- Advice & representation on Repossession Proceedings
- Self-Adjudication/Debtors’ Petitions
Insolvency and Debt Recovery
Napiers wants to play its part in helping people, organisations and businesses adapt to the “new normal” and successfully navigate the current uncertainties caused by the Coronavirus pandemic.
This section provides clear answers to commonly asked questions.
What is the Corporate Insolvency & Governance Act 2020?
It is new legislation to assist companies to trade through the current economic climate. The Act came into force on 26 June 2020.
It applies to companies, limited liability partnerships and charitable incorporated organisations and have implications for third parties such as suppliers and creditors.
Importantly, the Act has retrospective effect, therefore any pending petitions presented after 27th April 2020 will be affected, along with any winding up orders made after that date.
The new measures do not apply to individuals.
What are the key provisions under the Corporate Insolvency & Governance Act 2020?
The Bill proposes a number of temporary amendments to the pre-Covid procedures, including:
1. Giving directors immunity from action for wrongful trading for a limited period;
2. Preventing winding up petitions being presented on foot of statutory demands served during what is termed the “relevant period” (currently between 30 March 2020 and 30 September 2020);
3. Preventing winding up petitions being presented on grounds of insolvency during the “relevant period” unless a creditor has reasonable grounds to believe that (a) Coronavirus has not had a financial effect on the debtor, or (b) the debtor would have been unable to pay its debts even if Coronavirus had not had a financial effect on the debtor;
4. Restricting the Court’s ability to make winding up orders on foot of petitions presented by creditors during the “relevant period”;
5. Extending the time allowed for filing company documents, the time allowed for holding meetings and the manner in which they are to be held.
The Bill also provides a number of permanent amendments, including putting in place a new free-standing moratorium or stay intended to give companies in financial difficulties an opportunity to assess what options are open to them with support from an insolvency practitioner.
Can I present a winding up petition?
In light of the temporary amendments made in the Act unless a clear, undisputed debt has been outstanding and the debtor seemed unable to pay before March 2020, a winding up petition should not be presented before 30 September 2020. There may be adverse cost consequences if you do present a winding up petition and the High Court exercises its discretion and dismisses the petition.
If the debts owed to you pre-date March 2020 and the debtor seemed unable to pay well before then, it is possible that you will be able to present a winding up petition on grounds that the debtor would have been unable to pay its debts even if Coronavirus had no effect on its financial position. Whether you are likely to succeed will depend on the exact circumstances of the debt and your debtor. However, the court will likely set a high bar when considering in its discretion whether to make a winding up order.
There may still be other options available to collect the money owed to you, such as a County Court or High Court claim. Please contact us to discuss your individual case and your options further.
I issued a statutory demand after 1 March 2020. Can I present a winding up petition?
There is nothing to prevent statutory demands being served at this time. However, the Act provides that a winding petition cannot be presented after 27 April 2020 if it is based on an unsatisfied statutory demand served between 1 March 2020 and 30 September 2020.
There is no requirement to serve a statutory demand before presenting a winding up petition. There may be other grounds to present a winding up petition, albeit these grounds are limited and the court will likely set a high bar when considering in its discretion whether to make a winding up order - see “Should I issue a winding up petition” for further information.
Please contact us to discuss your individual case and your options further.
Does the Act apply to bankruptcy petitions?
No. The Act relates to corporate insolvencies only. Should you require any advice as to personal insolvency situations, please contact us.
My business faces an uncertain financial future, what should I do?
Many businesses are facing uncertain and unpredictable trading futures. Ultimately, directors need to be mindful of their duties to company creditors. The Corporate Insolvency & Governance Act 2020 provides a temporary suspension of the wrongful trading provisions in the Insolvency (NI) Order 1989. However, provisions in respect of misfeasance and fraudulent trading remain in place.
There are a number of things that businesses should be mindful of in these uncertain times:
- consider taking advantage of any temporary dispensation available, such as mortgage payment holidays, rental payment holidays, business rates holidays and the furlough scheme for employees;
- consider utilising any financial assistance provided by the Government if necessary and available. The government’s business support finder provides guidance on the available support options for businesses: https://www.gov.uk/coronavirus/business-support;
- a number of commercial loan schemes are currently available to a wide range of UK businesses.
- check the terms of any insurance policies to see if any “pandemic” cover is applicable;
- talk to suppliers investigate whether supply contracts can be temporarily altered if necessary;
- ensure current and forecasted financial plans are in place so there is an accurate record of the business’ position;
- contingency plan in case the business’ financial situation changes or worsens;
- if company directors are concerned their company faces insolvency, hold regular board meetings to discuss the financial aspects of the company. Accurate minutes of meetings should be taken that record and explain the reasons for any decisions made;
- take early professional advice from your accountant and an insolvency professional.
The protective measures that the Government has introduced do not wipe out debt. Businesses should therefore consider how those debts can be dealt with and take early steps to engage and reach agreement with relevant stakeholders on how debt will be dealt with.
If your business faces increasing creditor pressure, the Corporate Insolvency & Governance Act 2020 offers a new “moratorium” procedure or stay for companies and limited liability partnerships. Businesses in financial difficulty will be able to work with an insolvency practitioner to obtain at least 20 business days’ breathing space from creditors to allow the business to formulate a plan to deal with its financial problems.
If your business is going to go into an insolvency process like administration or a company voluntary arrangement, it is possible to obtain a freeze on creditors taking action whilst these processes are put in place. However, these types of moratoriums are not available in all cases.
If you have any concerns about the viability of your business you should speak to our team of experts and insolvency practitioners.