BERKELEY ROWE

INTERNATIONAL LAWYERS

BERKELEY ROWE

INTERNATIONAL LAWYERS

Hiding behind COVID-19 to avoid paying up

Read the press release version here.

HIDING BEHIND COVID-19 TO AVOID PAYING UP

Insolvency is something that has impacted a lot of our clients at Berkeley Rowe, mainly because many are shielding behind COVID19 to keeping up their contractual obligations. While many have pushed statutory demands and corporate insolvency proceedings to the side due to fear of judicial reprisal, Berkeley Rowe have pushed ahead unfazed; ICC Judge Mullen’s recent judicial guidance goes to support our approach and ratifies it with a Judicial direction. In simple terms, avoiding payment and blaming it on COVID19 without direct correlation will not work:

“The new Practice Direction on the Act requires not just that statement but also for the petition to set out the grounds for the belief (https://www.judiciary.uk/wp-content/uploads/2020/07/Insolvency-Practice-Direction-relating-to-the-Corporate-Insolvency-and-Governance-Act-2020.pdf) Paragraph 3.2 says

“In addition, the petition shall contain a summary of the grounds relied upon by the petitioning creditor for the purposes of the coronavirus test.”

A summary of grounds doesn’t have to be long, but it must state why the petitioner thinks the test is met. A petition might say: “The Petitioner’s grounds for believing that the condition in paragraphs 2(2)(b) of Schedule 10 to CIGA 2020 is met, are that the petition debt arose in August 2019 and, despite promising to pay by 30th September 2019, and then by 30th October 2019 and then by 1st February 2020, the company failed to do so and asked for more time as the result of the cancellation of a project in September 2019. The company appears to have been unable to pay its debts for reasons unrelated to Covid-19 since 2019 and continues to be unable to do so” or something like that.”

We do, and have successfully, defended clients who were unable to pay sums due as a result of COVID-19 – we have likewise been successful in litigating against those who can/could pay but refuse to do so.

How Berkeley Rowe can assist

Berkeley Rowe can assist by either ensuring or preventing the wind up of companies, regardless of whether Covid-19 is a factor or not. In the event of insolvency proceedings, Berkeley Rowe has dynamic litigators and advocates to ensure clients achieve the most favourable outcomes. Our collaborative team allows us to share expertise across all practice areas and work dynamically to ensure clients achieve the best result possible. At Berkeley Rowe we value taking a holistic approach to assist individuals and corporates in identifying the underlying factors giving rise to insolvency and propose the best cost-effective solutions to ensure a business remains solvent despite global crisis.

Read the press release version here.