Any change to the order of payments on insolvency inevitably has consequences on the outcomes for creditors, and is therefore likely to drive changes in behaviour. While some of those changes would have been obvious and anticipated by the legislature, others risk undermining some of the stability that has been brought about by initiatives taken by the UK government to support companies through the pandemic and is arguably contrary to the spirit behind the changes introduced by the 2020 Corporate Insolvency and Governance Act (CIGA).
Changes to the waterfall
On 1 December 2020 HM Revenue and Customs (HMRC), the UK tax authority, will become a second-ranking preferential creditor in respect of certain taxes, most notably uncapped VAT, PA…
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