Government gives businesses much-needed breathing space with extension of insolvency measures
Measures from the Corporate Insolvency and Governance Act extended to relieve pressure on businesses dealing with coronavirus.
Update February 2021
The government announced it intends to extend the power (granted through the Corporate Governance and Insolvency Act) to make temporary amendments or modify the effects of corporate insolvency and governance legislation for an additional year. The government laid the regulations on 11 February 2021 in Parliament ahead of the power expiring on 30 April 2021.
Earlier updates
On 9 December 2020 the government announced it intends to extend the temporary suspension of the use of statutory demands and winding-up petitions until 31 March 2021.
On 25 November 2020 the government announced it intends to reinstate the temporary removal of the threat of personal liability for wrongful trading from directors until 30 April 2021.
The government also announced that companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 30 March 2021. This means that shareholders can continue to examine company papers and vote on important issues remotely.
Measures put in place to protect businesses from insolvency will be extended to continue giving them much-needed breathing space during the coronavirus (COVID-19) pandemic, the government announced today (24 September).
A raft of changes to protect businesses from insolvency were introduced in the Corporate Insolvency and Governance Act and were due to expire on 30 September 2020. The temporary measures include:
- companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 30 December 2020 (date updated - see Update December 2020). This means that shareholders can continue to examine company papers and vote on important issues remotely
- statutory demands and winding-up petitions will continue to be restricted until 31 December 2020 to protect companies from aggressive creditor enforcement action as a result of coronavirus related debts
- termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. However, small suppliers will remain exempted from the obligation to supply until 30 March 2021 so that they can to protect their business if necessary
- the modifications to the new moratorium procedure, which relax the entry requirements to it, will also be extended until 30 March 2021. A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding up petition. The temporary moratorium rules will also be extended to 30 March 2021
Business Minister Lord Callanan said:
It is vital that we continue to deliver certainty to businesses through this challenging time, which is why we are now extending these important and necessary measures to protect companies from insolvency.
Through this measure, we want to ensure businesses are able to not only come through this testing period, but also to plan, adapt and build back better.
Additional information
- businesses will be protected from the threat of eviction until the end of year following an extension to the commercial eviction ban announced on 16 September 2020
- this extension will protect businesses that are struggling to pay their rent due to the impact of COVID-19 from being evicted and help the thousands of people working in these sectors feel more secure about their jobs
- the government is clear that where businesses can pay their rent, they should do so, as this support is aimed at those struggling the most during the pandemic. This is set out in the Code of Practice which was published in June.
Last updated 16 February 2021 + show all updates
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Government intends to extend the power to make temporary amendments or modify the effects of corporate insolvency and governance legislation for an additional year.
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Government will reinstate the temporary suspension of the use of statutory demands and winding-up petitions until 31 March 2021.
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Updated with 25 November announcement that government will reinstate the temporary removal of the threat of personal liability for wrongful trading from directors until 30 April 2021, and that companies obliged to hold AGMs will still have flexibility to hold them virtually until 31 March 2020.
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Updated with 25 November announcement that government will reinstate the temporary removal of the threat of personal liability for wrongful trading from directors until 31 April 2020, and that companies obliged to hold AGMs will still have flexibility to hold them virtually until 31 March 2020.
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First published.