In these challenging times, it is difficult to know what legal services are available during lockdown. However, we all still need access to justice, and the Courts and Tribunals have taken appropriate measures to continue this service with some necessary changes. What changes have been made to the bankruptcy and insolvency process?
The Coronavirus Act 2020 (CVA 2020)
On 25 March 2020, the Coronavirus Bill 2019-21 completed its progress and received Royal Assent. The Act was rushed to implement emergency provisions and protect those affected by COVID-19 and the associated lockdown in the UK, including the operation of the courts.
There are two distinct changes to the court procedures as a result of CVA 2020, which will remain in place until necessary during the crisis. These are:
- Protection for Residential and Business Tenancies
- Changes to operation of the Courts and Tribunals
The main changes that affect the operation of the civil courts through CVA 2020 is the adoption of proceedings to take place via video and audio links. It will be at the discretion of the court to decide the appropriateness of who can participate and what proceedings can take place using this technology.
Changes to Bankruptcy and Insolvency Court Hearings
In light of the protection for business tenants against eviction, landlords are now taking to winding up mechanisms in order to obtain rent payments. However, there are some notable changes to be followed. For example, a statutory demand or winding up petition presented against a company will need to be served at the company’s registered address, which at this time may be empty. Therefore, this is best served both at the registered address and by email to the company’s legal representative or a director. Statutory demands and bankruptcy petitions presented against individuals need to be served in person, which may present practical difficulties due to the need to adhere to social distancing rules.
A Temporary Insolvency Practice Direction (TIPD) has been drafted to assist with proceedings involving the Business and Property Courts during the pandemic. This TIPD also deals with the use of audio and video technology for hearings, in a similar manner to CVA 2020. In order for bankruptcy hearings to proceed under the TIPD, all parties need to be legally represented or agree to the hearing taking place. This gives the debtor an opportunity to adjourn a petition by simply refusing to agree to attend the hearing remotely.
Unlike the County Courts, all petitions for winding up and bankruptcy to be heard before an Insolvency and Companies Court (ICC) Judge will proceed as normal.
Although there has been inevitable disruption to the way courts and tribunals are dealing with claims, very few County Courts have actually closed.
In nearly all situations, you should expect to wait longer for your application to be dealt with, particularly if this is considered a low priority. Detailed care in terms of the method and delivery of statutory demands service must be taken, and social distancing for personal services could also prove problematic.
There are many factors to consider when going through bankruptcy and insolvency. If you have any queries regarding the process in these uncertain times, please contact Paul Formby or Jodie Sumner using the details below.