Corporate Insolvency and Governance Bill—a view from the restructuring and insolvency profession

Corporate Insolvency and Governance Bill—a view from the restructuring and insolvency profession

The new Corporate Insolvency and Governance Bill was published on 20 May 2020. Frances Coulson, head of insolvency and litigation at Moon Beever LLP considers the Bill from a restructuring and insolvency perspective.

What are the main points that the Bill covers?

There are seven main points covered in the Bill.

Company moratorium

The creation of a new moratorium for businesses—this is a free-standing moratorium which can be sought for an initial 20 business days and extended after day 15 of those either with consent of creditors or by application to court or without creditor consent, but subject to the support of the monitor and only if pre-moratorium and non-payment holiday, excluded moratorium debts (eg rent during the moratorium, wages etc) have been paid.

During the moratorium period the company has to be supervised by a licenced insolvency practitioner called ‘monitor’ (something R3 lobbied hard for as originally this role was wide open). The moratorium itself is intended to give a breathing space to companies to find a solution to its financial difficulties, but the directors remain in control of the company: the ‘debtor is in possession’.

There is no particular prescribed route out of the moratorium—it can be used to allow a breathing space for preparation of a company voluntary arrangement, for advice on administration or liquidation, or a scheme of arrangement or a restructuring plan under the new Part 26A of the Companies Act 2006 (CA 2006), or simply to raise new capital.

There are limitations. The company cannot have been under a moratorium in the past 12 months (unless the court allows it). The company and its proposed monitor must also make a number of statements regarding the company’s financial state and the prospects for rescue, before it can enter a moratorium. The moratorium must be brought to an end if it becomes apparent to the monitor that the company is unlikely to be rescued or can’t pay the debts set out

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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.