Addressing issues relating to UK business insolvency and updates the UK insolvency regime
On 26 June 2020 the Corporate Insolvency and Governance Act (the Act) obtained Royal Assent. The majority of its provisions came into force that day. The Act addresses numerous issues arising for businesses from the COVID-19 pandemic, in particular the potential surge of business insolvencies that might arise as a result of the disruption caused by the crisis, as well as to provide updates to the UK insolvency regime generally.
Set out below are some of the key provisions of the Act:
- Free standing moratorium with the purpose of facilitating a rescue of a failing company.
- New restructuring powers which gives companies more flexibility to agree to a restructure plan even where they cannot obtain the consent of all creditors.
- Prevention of a winding-up petition being presented on the basis that a company has not settled a statutory demand.
- Prevention of a wide range of suppliers from terminating agreements with a company on the basis that the company has entered or proposes to enter into a formal restructuring or insolvency procedure.
- Relaxation of some of the filing requirements for companies at Companies House.
- Temporary suspension of wrongful trading to support and protect company directors.
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