Corporate Insolvency and Governance Act 2020

Corporate Insolvency and Governance Act 2020

Having received its first reading in the House of Commons on 20 May 2020, the Corporate Insolvency and Governance Bill has today been published (having received Royal Assent yesterday), resulting in the Corporate Insolvency and Governance Act 2020  (CIGA 2020).

The CIGA 2020  represents the biggest change to the UK’s insolvency framework in 20 years.

The overarching objective of the CIGA 2020 is to provide businesses with the flexibility and breathing space they need to continue trading during the current coronavirus (COVID-19) pandemic. The measures are designed to help UK companies and other similar entities by easing the burden on businesses and helping them avoid insolvency during this period of economic uncertainty.

According to the explanatory notes published in support of the Bill when it was first introduced to the House of Commons, the CIGA 2020  has three main sets of measures to achieve its purpose:

  • to introduce greater flexibility into the insolvency regime, allowing companies breathing space to explore options for rescue while supplies are protected, so they can have the maximum chance of survival
  • to temporarily suspend parts of insolvency law to support directors to continue trading through the emergency without the threat of personal liability and to protect companies from aggressive creditor action
  • to provide companies and other bodies with temporary easements on company filing requirements and requirements relating to meetings including annual general meetings

The CIGA 2020 is a combination of reactionary, temporary measures designed to help businesses survive the coronavirus pandemic, and permanent measures which were formulated as a result of the Insolvency and Corporate Governance consultation that culminated with the government’s response in 2018.

The CIGA 2020 includes seven main provisions:

  • introduction of a company moratorium—directors of insolvent companies or companies that are likely to become insolvent can obtain a 20 business day moratorium period to allow viable businesses time to restructure or seek new investment free from creditor action. The moratorium period may also be extended. The moratorium will

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.