The economic impact of COVID-19 has triggered calls for emergency fiscal and legislative measures to address liquidity and legal problems. In meeting this challenge, it is vitally important that we remember that England already has some of the most flexible and adaptable corporate restructuring processes anywhere in the world.
Further work has been undertaken on the Technical Committee's Rescue Administration: Saving livelihoods briefing note on mobilising administration to stabilise, protect, and, if necessary, restructure companies. The current version of that briefing note is now available below.
Although relevant statutory provisions provide that an officer of a company in administration cannot exercise a management power without the consent of the administrator, the administrator can decide to leave certain management powers with those officers. It seems likely that there are many cases arising out of the COVID-19 crisis where this would be appropriate and could keep costs down.
With this in mind, Mark Phillips QC, William Willson and Stephen Robins at South Square have very kindly produced the protocol below which could be used by an administrator to consent to the directors continuing with certain management powers.
Rescue administration is not going to be appropriate in all cases. There are some difficult issues regarding funding and administration expenses that need to be dealt with and the administrator will need to be satisfied that he or she is suitably protected. It could, however, provide a solution in some cases and so we would encourage members to consider this flexible and well-tested tool.
The ILA Technical Committee continues to seek views from the IP community and so the briefing note and the protocol remain subject to review. ILA Technical Committee aims to keep members informed of relevant developments through its programme of technical bulletins and special updates.