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Insolvency Bitesize

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This edition of Insolvency Bitesize contains its usual eclectic mix of content in what remains a varied but active insolvency market.

The Government is proposing far-reaching reform on IP regulation, which would include a new government single regulator – not an independent body (as has been previously mooted) - who would sit within the Insolvency Service, with powers to authorise, regulate and discipline individual IPs and firms providing insolvency services, and set technical, professional, ethical and educational standards. The Future of Insolvency Regulation consultation closes this month. We, along with the rest of the industry, will await the results with interest.

In this edition of Insolvency Bitesize, among other developments, we take a look at:

  • what you need to consider in light of the National Security and Investment Act, the pre-appointment steps you might want to take and possible documentary implications for insolvency sale transactions;
  • why failing to notify the Secretary of State of proposed redundancies could give rise to criminal liability; and
  • how the High Court has, for the first time, handed down some useful guidance on the operation of the new standalone moratorium procedure introduced as part of the Corporate Insolvency and Governance Act’s 2020 reforms.

We hope you find this edition useful. As ever, please get in touch with any questions you may have.

Topics covered in this report

1

National Security and Investment Act: implications for insolvency share sales and business sales

The National Security and Investment Act 2021 (the “NSI Act”) came into force on 4 January 2022.  As we highlighted in our February 2021 edition of Insolvency Bitesize, it implements a screening regime for acquisitions of certain entities and assets located in, or which have a sufficient connection to, the UK. In particular, the NSI Act introduces a mandatory notification regime in respect of the acquisition of control of entities active in 17 high-risk sectors in the UK. Regulations specify the sectors and define the activities which fall within each of the sectors and the Government has published guidance to assist in their interpretation. The NSI Act also introduces a broader call-in power in respect of the acquisition of control of assets and entities which could pose a risk to national security. Parties to a transaction which may be subject to the call-in power may decide to provide a voluntary notification.

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