Is there light at the end of the Tunnel for Company Creditors who are not being paid?

Since the introduction of the Corporate Insolvency & Governance Act (CIGA) in 2020, there has been a restriction on the presentation of new creditors’ petitions against companies. CIGA introduced a Moratorium as a permanent protective measure, therefore it was necessary to amend the Insolvency (Northern Ireland) Rules 1991, as the protections under CIGA ended in March 2022.

The delay in introducing the amended rules arose as the NI Executive has been suspended since February 2022.  However, following the introduction of the Northern Ireland (Executive Formation Etc) Act 2022, Departments have limited powers to make legislation where it is considered to be in the public interest to do so.  This power was exercised and The Insolvency (Amendment) Rules (Northern Ireland) 2023 will be brought into operation on 13 March 2023.

Moratorium

The Rules set out procedures for the following:

• The process of obtaining a Moratorium by filing notice at Court;
• Claims made by creditors in a Moratorium;
• Bringing a Moratorium to an end;
• Monitor Remuneration;
• Priority of Moratorium debts in subsequent Administration or Winding Up.

To date there has been little appetite in the NI market to avail of this protection.  It will be of interest to see if the permanent amendment to the Rules will make this process seem more inviting in the future.

Update to Court Forms

The Rules include amendments to forms to be filed on the Appointment of an Administrator by the Court, Company/Director and, Winding Up of a company by Court, Creditors or Company following NI’s exit from the EU.

What Next?

There has been a stay on the presentation of new creditor petitions in NI since the introduction of CIGA.  In light of this development, we await update guidance from the Bankruptcy Court on lodging new creditor petitions.

This article has been produced for general information purposes and further advice should be sought from a professional advisor. For further information about any of the issues raised in this article, please feel free to get in touch with our Insolvency & Business Restructuring team.

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