Insolvency Measures Extended Till End of March 2021

Insolvency Measures Extended Till End of March 2021

Measures from the Corporate Insolvency and Governance Act have been extended to relieve pressure on businesses dealing with coronavirus.

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.

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.

“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,” Business Minister Lord Callanan said. “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.”

Share this article:

Related Articles

Sebastien Fontenoy holds an MBA degree and writes about entrepreneurship, startups and finance.