Malcolm Niekirk discussed the light touch administration protocol in his most recent coffee break briefing, if you want to read the full article please click the link at the bottom of the page. You can also view the presentation slides and/or watch the recording of the briefing following the same link.
What is the light touch administration protocol?
The light touch administration protocol was designed as a summary debtor-in-possession procedure, with specific relevance to businesses that are fundamentally sound, but in crisis as a result of indefinite enforced closure. That has a renewed relevance.
Why was the light touch administration protocol developed?
The national lockdown, announced in March 2020, saw many enforced business closures. With zero or minimal trading, and staff on furlough, company survival remained possible in most cases.
Many otherwise healthy businesses faced financial difficulty as a result of restrictions imposed. These fundamentally sound businesses would be able to survive the pandemic as an ongoing concern.
There was consequently a lot of talk in the industry about the need for a debtor-in-possession procedure that allowed management to continue in control of their business. As ever, though, greater management involvement leads to greater stakeholder risk.
The courts’ reaction to light touch administrations
We have seen in examples of Debenhams and Davey v Money that the courts seem happy with these procedures where they are properly run.
Courts do not like it when administrations are used as a tool to override legitimate interests of stakeholders (particularly with internal disputes).
Administration orders are certainly safer if there is a potential internal dispute.
If you want to know more about the light touch administration protocol please read the full article here: https://www.frettens.co.uk/site/library/frettensnews/light-touch-administration-protocol-insolvency-lawyer