Insolvency Update: The Queen’s Speech
The Queen’s Speech gave us a preview of the government’s forthcoming plans, but disappointingly didn’t address the much talked about corporate insolvency reforms...
However, it did indicate likely changes to pension regulator powers and the introduction of airline insolvency legislation following the failures of Monarch in 2017 and Thomas Cook this year.
The legislative agenda looks likely to include:
- reinvigorating the Pension Schemes Bill with the aim of increasing the pension regulator’s power to take early action against employers that fail to meet their pension responsibilities; which may include custodial sentences for employers who are reckless with employee pensions. In the context of insolvency, this will put greater pressure on management teams (pre and post insolvency) to ensure companies comply with pension obligations when considering a company’s financial position; and
- the introduction of airline insolvency legislation. The Queen’s Speech appears to have taken on-board (no pun intended) proposals set out in the Department of Transport’s Report published in May 2019. Although the details and timeline for implementation are unknown, it’s likely to feature a flight protection scheme overseen by the CAA to repatriate passengers from the UK and a special airline administration mechanism allowing insolvent airlines to continue to operate under increased oversight by the CAA for the purpose of repatriating UK passengers.
The final shape of the actual legislation will depend on parliamentary scrutiny and debate. However, the airline proposals will have to overcome, or at least address, whether a flight protection scheme needs to be funded by passengers themselves via increased ticket levies, and the need to strike a balance between consumer protection and increasing pressures on airlines flight prices (which could inadvertently force more to fail).
If you’d like more information on this update, please contact Frank Bouette or give us a call on 0345 070 6000.
Research conducted by David Lim.