Government gives businesses much-needed breathing space with extension of insolvency measures (update)
Monday, 7 December 2020 15:43
Measures from the Corporate Insolvency and Governance Act extended
to relieve pressure on businesses dealing with coronavirus. Update
December 2020 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 31
April 2020. The government also announced that...Request free trial
Measures from the Corporate Insolvency and Governance
Act extended to relieve pressure on businesses dealing with
coronavirus.
Update December 2020
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 31 April 2020.
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 31 March 2020. 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
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.
- 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.
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