Q&As

Does section 233B of the Insolvency Act 1986 prevent a supplier from calling on a parent company guarantee (or other security) which is triggered by the insolvency of a customer?

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Produced in partnership with Ryan Hocking of Hardwicke Chambers
Published on LexisPSL on 22/09/2020

The following Commercial Q&A produced in partnership with Ryan Hocking of Hardwicke Chambers provides comprehensive and up to date legal information covering:

  • Does section 233B of the Insolvency Act 1986 prevent a supplier from calling on a parent company guarantee (or other security) which is triggered by the insolvency of a customer?

Does section 233B of the Insolvency Act 1986 prevent a supplier from calling on a parent company guarantee (or other security) which is triggered by the insolvency of a customer?

The Corporate Insolvency and Governance Act 2020 (CIGA 2020) inserted section 233B into the Insolvency Act 1986 (IA 1986) as part of a package of measures intended, among other things, to mitigate the economic impact of the coronavirus (COVID-19) pandemic. For further information on CIGA generally, see: Corporate Insolvency and Governance Act 2020—overview.

The first point to note is that IA 1986, s 233B only applies where a company becomes subject to a relevant insolvency procedure (as defined in IA 1986, s 233B(2)). It therefore follows that there would be no impact upon a parent company guarantee if that guarantee is

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