As a creditor, especially during the current Covid-19 crisis, it may be tempting to accept all and any payments from debtors.
Payments that a debtor company makes to you during the period where there is a winding-up petition in place will be a void disposition, under section 127 of the Insolvency Act 1986, unless there is an application to the Court and receipt of what is known as a “validation order,” allowing you to keep the money.
What’s happening in real life?
Following the mass adjournment of the winding-up list by ICC Judge Mullen, the Court has now implemented the Protocol for Remote Hearings and a recent winding-up list proceeded very smoothly before ICCJ Briggs, via Skype. It would seem that going forward, all private petitions (those not brought by HMRC) will be going ahead via Skype.
The practicalities of the virtual hearing are straightforward: the Companies Court case worker is in contact with the Petitioning Creditor a day or two prior to the hearing, to get details of the debtor for the invitation to the hearing. On the morning of the hearing, a Skype invitation is sent in batches to the parties. The onus is on the Petitioning Creditor to provide debtor details to the Court for the hearing. If a Petitioning Creditor is unable to provide those details it may be a reason for the Court to order an adjournment. Similarly, where parties did not have papers in order, an adjournment was ordered.
The general time for adjournment was for the next available date after 42 days, so it will be some time before cases get listed again.
The added complexity is of course that due to the current Covid-19 crisis it may take some time for applications for a validation order to be heard remotely. It is anticipated the Court will prioritise applications of this kind on an urgent basis.
Skype hearings. Who’d have thought it?
This update is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this update may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.