The Corporate Insolvency and Governance Bill 2020 aims to give companies experiencing financial difficulties as a result of the Coronavirus outbreak extra assistance to increase their chances of survival. A number of measures delay the normal insolvency timetable and prohibit claims by creditors.

The Bill is limited to only those urgent measures required to respond to the COVID-19 emergency. It will:

  • Introduce a new moratorium to give companies breathing space from their creditors while they seek a rescue.
  • Prohibit termination clauses that engage in:
    • Entering an insolvency procedure.
    • Entering the new moratorium or
    • Beginning the new restructuring plan procedure.

It will also prevent suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process.

  • Introduce a new restructuring plan for companies in financial distress. This includes new cross-class cram down procedures that allow a class of creditors to be bound by the restructuring plan even if they do not agree with it. This provision takes steps to provide safeguards for affected creditors in these situations.
  • Enable the insolvency regime to flex to meet the demands of the crisis.
  • Temporarily remove the threat of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency.
  • Temporarily prohibit creditors from filing statutory demands and winding-up petitions for COVID-19 related debts.
  • Temporarily give companies and other bodies greater flexibility to hold Annual General Meetings (AGMs) and other meetings in a safe and practicable manner in response to the pandemic.
  • Temporarily ease burdens on businesses by extending filing deadlines at Companies House.
  • Allow for some of the temporary measures to be retrospective, giving immediate support to businesses during COVID-19.

Territorial scope

  • The insolvency law measures in the Bill are 'reserved' in relation to Wales, in some respects devolved in Scotland and are fully transferred to Northern Ireland.
  • The measures on meetings and filings apply to the whole of the UK. Company Law is a reserved matter in England and Wales and in Scotland.
  • As some of the measures, by virtue of the law they interact with, touch on devolved competencies in Scotland, a Legislative Consent Motion is being sought.
  • As provisions will be made in the Bill for Northern Ireland, a Legislative Consent Motion is being sought.

Useful guides

Ceasing trading Index: What are your options?
Subscriber guide to closing down your company.

Ceasing trading index: Freeview
An index to our key guides covering how a company can cease trading what options are available when a trade has ceased.

COVID-19: Government Support Tracker
This FREEVIEW tracker covers the key measures announced by the government to support individuals and businesses, as we get through COVID-19. This tracker is updated on a daily basis.

External link

Corporate Insolvency and Governance Bill 2020

 

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