Commenting on The Corporate Insolvency and Governance Bill presented in the House of Commons today, Steve Russell, Head of Business Restructuring Services at PwC UK, said:
“When passed, the new legislation will introduce a series of measures to provide companies with the breathing space to restructure their balance sheets and engage with their creditors, giving the best opportunity to survive as a going concern.
“The creation of a new monitor role takes into account the long held view that a ‘debtor in possession’ process is needed as part of a UK insolvency toolkit which we welcome and intend to consent to act as a monitor in appropriate cases.
“The extension of protections on the supply of essential services to cover the supply of other services to a company in the moratorium (as well as to companies in an insolvency process) should minimise the ability of suppliers to use an insolvency to gain an advantage over other suppliers with less commercial leverage.
“We also welcome the addition of the new restructuring plan tool which should make it easier for companies to agree compromises with creditors by simplifying voting processes and focusing on the interests of affected creditors. This should also reduce the costs of getting these creditor compromise agreements approved.
“The legislation as drafted recognises the important role that the existing CVA tool can play in the restructuring process if used correctly. By using this as part of a wholesale restructuring process it should significantly improve the success rates of CVAs which have previously been much maligned.
“These combined measures, alongside the short term extension of the suspension of wrongful trading and the removal of the threat of winding up petitions until at least 30 June 2020 will provide much needed relief to companies facing financial pressure brought about by the current pandemic, the survival of which will be key to the country’s economic recovery once the current crisis has subsided.
“Whilst these changes provide the gift of more time, engaging in discussions with all stakeholders as early as possible remains key and company directors must ensure that they address their underlying issues through a combination of strategic, operational and financial restructuring, if a long term successful outcome is to be achieved.”
Notes to editor
PwC has been actively contributing to consultations on these insolvency changes over the past several years through various trade and industry bodies and are pleased to see that many of the comments made have been incorporated.
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2020 PwC. All rights reserved