Corporate Insolvency and Governance Bill

Corporate Insolvency and Governance Bill

We look at the reforms to UK insolvency laws set out in the Corporate Insolvency and Governance Bill which was introduced to the House of Commons and given its first reading on Wednesday 20 May 2020 ahead of being formally debated in the coming weeks.

The Corporate Insolvency and Governance Bill (Bill), which was introduced to the House of Commons and given its first reading on Wednesday 20 May 2020, represents the biggest change to the UK’s insolvency framework in 20 years.

The overarching objective of the Bill 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.

The explanatory notes published alongside the Bill state that the Bill 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 Bill 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 Bill includes seven main provisions:

  • introduction of a company moratorium
  • introduction of a restructuring plan
  • temporary restrictions on winding-up petitions
  • temporary suspension of wrongful trading liability 

  • prohibition on termination clauses in supply contracts

  • temporary changes to holding annual general meetings and general meetings, and
  • extensions to some Companies House filing

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About the author:

Anna joined the Restructuring and Insolvency team at Lexis®PSL in August 2013 from Berwin Leighton Paisner where she was a senior associate in the Restructuring Team.

Anna has worked on a number of large scale restructurings primarily in the UK market acting on behalf of lending institutions.

Recent transactions include the restructuring of a UK hotel chain and the administration sale of part of the Connaught group. Anna has also spent time on secondment at The Royal Bank of Scotland and trained at Clifford Chance qualifying in 2007.