UK: RESTORATION OF CROWN PREFERENCE – WHAT ARE THE IMPLICATIONS FOR BORROWERS AND LENDERS?

On 11 September, an article from Stephenson & Harwood LLP reminded one that a law change will restore HMRC as a preferential creditor on insolvency with effect from 1 December.  In an insolvency commencing or after 1 December, HMRC will rank as a preferential creditor in respect of certain taxes.  The reintroduction of Crown Preference does not affect fixed-charge holders, who will continue to rank ahead of preferential creditors, including HMRC.  However, it says that floating charge funding is one of the most frequently used tools for business turnaround and there is already evidence that the proposed changes are making it harder for businesses to access rescue finance.

https://www.shlegal.com/insights/restoration-of-crown-preference-what-are-the-implications-for-borrowers-and-lenders

Author: raytodd2017

Chartered Legal Executive and former senior manager with Isle of Man Customs and Excise, where I was (amongst other things) Sanctions Officer (for UN/EU sanctions), Export Licensing Officer and Manager of the Legal-Library & Collectorate Support Section

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