Vernon Dennis has, this month, had the fourth edition of his Insolvency Law Handbook published by The Law Society. This step-by-step guide carefully explains each of the main insolvency processes, highlighting the key decisions to be made, the options available and the potential pitfalls.
The handbook continues to act as an essential asset for professionals called upon to advise debtors faced with personal or corporate insolvency, or their creditors.
Insolvency law and practice remains an area that is highly influenced by prevailing socio-economic conditions, insolvency processes and procedures being most tested in times of economic distress. Problems and difficulties that arise in a financial crisis often result in legislative reform. By their very nature, these "new" reforms will therefore seek to deal with the ills exposed in the last economic crisis, rather than those which might arise at the time of the legislative enactment. This new edition evaluates the current climate, assessing whether the present economic travails would result in changes to insolvency law and practice.
This new edition is particularly pertinent as it was developed and published during a period of great uncertainty for businesses. As well as Brexit, Covid-19 acted as an accelerator of change and introduced new measures and techniques which are extensively covered in the book. The coronavirus pandemic continues to have a profound effect upon business activity. There is great uncertainty as to whether the enormous public and private debt burden incurred as a result of the pandemic will lead to huge rises in individual and corporates insolvency; the publication of the new edition is therefore timely.
Against the backdrop of this febrile economic atmosphere, the Government introduced a great range of measures to pump the economy through Government-backed loan schemes and protecting employment through job retention schemes. In the midst of such macro-economic measures, in June 2020 emergency corporate insolvency legislation in the form of the Corporate Insolvency and Governance Act 2020 was introduced. This saw new permanent debtor led processes being introduced, together with emergency legislation which fundamentally altered the balance between creditors and debtors. These measures were designed to prevent the self‑interest of market economics causing an accelerated and unchecked form of financial Darwinism. Undoubtedly the immediate threat of a recessionary spiral causing unprecedented insolvency levels has been averted. What is less certain however is whether the fundamental realignment of creditor and debtor interests, even if temporarily but now for over 12 months, has done no more than "kick the can along the road" building in its wake an unsustainable debt mountain, one both seen in the state and private sectors. It is against the background of the huge increase in debt that the new measures explored in the book will be judged.
Look out for upcoming articles covering the key points to note from the book including: New Rescue Tools aka Moratorium and Restructuring Plan; Cross Border insolvency post Brexit; The Evolution of the CVA and The Future for the Pre-Pack Administration.
If you would like to purchase the book, please go to The Law Society Bookshop.