Restructuring Roundup (UK)

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Here is our summary of key developments relevant to restructuring professionals that you might have missed, with links for further information.

MVLs (again). HMRC has published guidance seeking to encourage effective engagement with HMRC, so that MVLs are concluded within 12 months. This guidance is timely, following the NOAL decision (covered in our MVL alert). The gist of the guidance is to encourage tax returns to be submitted before a notice of intended dividend is issued. Our MVL alert covers this in more detail.
HMRC have also issued guidance about setting up and closing PAYE schemes following a pre-pack, and updated its Appeals Reviews and Tribunals Guidance Manual clarifying that companies that have been struck from the Companies Register cannot appeal against an HMRC decision or assessment, and that insolvent companies cannot do this either. It is for the insolvency practitioner (IP) to bring or continue an appeal if they decide to.
Did you know there will be a new HR1 form?

As from yesterday, practitioners will be able to submit a digital HR1 form. Paper forms can still be used, but only until 30 November 2025, after which the digital form must be used. A word of warning – the form is estimated to take 40 minutes to complete, will not be saved (and therefore must be completed and submitted at the same time) and you will need to save/print the answers provided.
This post from the Insolvency Service following their demonstration of the new form sets out some helpful FAQs. You will note the Insolvency Service say that: “There is no change to the statutory requirements. Insolvency Practitioners are still required to submit HR1 forms [where there are day-one dismissals]”. This is arguably best practice, but remember the Palmer case, which confirmed than an office holder is not liable for failure to give notice.
Also bear in mind that this form will likely need changing again when the Employment Rights Bill comes into force – our previously shared briefing note touches on the changes.

You should hopefully have seen that starting from 1 October, a revised version of the Code of Ethics for Insolvency Practitioners will come into effect, clarifying how IPs should behave as professionals and when they might be considered to be acting in a professional capacity (make sure you consider your LinkedIn posts), as well addressing the impact of advances in technology. Both the IPA and ICAEW have published the revised code, and the revised paper on “Dealing with Complaints” is also available via the IPA’s website.
It is almost impossible to send out an update without mentioning restructuring plans.

At one end of the spectrum, we have more Court of Appeal guidance from cases such as Petrofac and Waldorf, which have firmly put to bed the position taken post Virgin Active that the views of out of the money creditors do not count – they do.
But costs remain an issue with the court emphasising the need for proportionality and flagging concerns about extraordinarily high costs in the Petrofac costs judgment.
At the other end of the spectrum DTSTB had its plan sanctioned with advisors quoting costs at lower than a CVA. The company (with a turnover of approximately £6 million) compromised historic secondary preferential debt and unsecured creditor claims – is this the first true “mid-market” restructuring plan?

Although a way off, the proposed changes to the late payment of commercial debts legislation are likely to filter through to the restructuring world with a tightening of payment terms and increased interest having the potential to place additional financial pressures on businesses. Worth noting too, is the proposed change in construction retention payments – as a sector already under pressure such a change is likely to be unwelcome.
We are delighted to have Chris Roberts join us as a partner in our Restructuring & Insolvency Practice in Manchester. Chris joins from DLA Piper, where he led the restructuring and insolvency team across the North West and contributed significantly to the development of the firm’s national practice. With a career spanning more than two decades, Chris focuses on non-contentious restructuring and turnaround matters, advising lenders, corporates, sponsors and officeholders. He has extensive experience leading multi-stakeholder restructurings and distressed M&A transactions across a range of sectors. You can read the full press release here.
Given the increasing use of Artificial Intelligence (AI) by UK companies, this US blog: Trade Secrets: Now Even Your Dog Knows Them (Thanks, Remote Work & AI!) might offer some useful food for thought for UK businesses. It’s an interesting read.
Finally, we have two new quick guides, which are helpful to boards wanting a high level overview of the CVAs or liquidation process.

If you would like specific advice on any of these issues or anything else, please contact a member of our Restructuring & Insolvency team.

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