Q&As

Do the 'ipso facto' provisions of the Corporate Insolvency and Governance Act 2020 apply to a lease, ie is a landlord a supplier of goods or services for the purposes of the Act?

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Published on LexisPSL on 16/07/2020

The following Property Disputes Q&A provides comprehensive and up to date legal information covering:

  • Do the 'ipso facto' provisions of the Corporate Insolvency and Governance Act 2020 apply to a lease, ie is a landlord a supplier of goods or services for the purposes of the Act?
  • Supply of other services

Do the 'ipso facto' provisions of the Corporate Insolvency and Governance Act 2020 apply to a lease, ie is a landlord a supplier of goods or services for the purposes of the Act?

On 26 June 2020, the Corporate Insolvency and Governance Act 2020 (CIGA 2020) inserted section 233B into the Insolvency Act 1986 (IA 1986). Section 233B places restrictions on so-called ‘ipso facto’ provisions in relation to contracts for the supply of goods or services. An ‘ipso facto’ provision allows a party to exercise contractual termination rights where a company enters into an insolvency or restructuring procedure.

Under the new section 233B, a provision in a contract for the supply of goods or services ceases to have effect when a company becomes subject to an insolvency procedure if under the provision:

  1. the contract or the supply would terminate because the company becomes subject to the insolvency procedure, or

  2. the supplier would be entitled to terminate the contract or the supply, or do any other thing, because the company becomes subject to the insolvency procedure

It is common for leases to include insolvency as an event that triggers the landlord’s right to forfeit. In addition, other contracts for the disposition of land often include termination provisions triggered by an insolvency event relating to the disponee.

The question therefore arises as to whether a lease (or other contract for the

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