Hasty UK insolvency law gives unequal rights to creditors

Patisserie Valerie UK insolvency from PA 29Jun20 575x375
By Jon Hay
29 Jun 2020

The UK’s new insolvency law came into force on Friday, and lawyers have been spending the weekend picking through its 250 pages to understand the implications. While some have welcomed it, others pointed out that in its haste to push it through Parliament, the government has introduced several changes that skew the balance between various kinds of lenders which hitherto had been treated equally.

In particular, it creates differences in status in certain circumstances between bonds and loans, between revolving credit facilities and term loans, and between guarantors and debtors — each of which pairs normally has equal rights.

The Corporate Insolvency and Governance Act has been in the works since 2016 ...

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