Reform of UK insolvency laws

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Reform of UK insolvency laws
  • Background
  • Previous proposals for reform
  • UK legal reform in response to the coronavirus pandemic
  • Stays on forfeiture, possession and eviction
  • Breathing Space Regulations 2021
  • CLLS proposals

Reform of UK insolvency laws

Background

The coronavirus (COVID-19) crisis has had a significant impact on businesses around the world, putting many at real risk of insolvency. Some jurisdictions have made temporary changes to their insolvency laws to assist companies (and their directors) and individuals given the current uncertainty over how long the crisis will continue and what its lasting effects will be.

This Practice Note considers the position in the UK. For details on the reforms in other jurisdictions, see: Coronavirus (COVID-19) Tracker of insolvency reforms globally [Archived].

Previous proposals for reform

On 26 August 2018, the government issued a response to its consultations on Insolvency and Corporate Governance, announcing several proposed changes to UK insolvency legislation. The proposals include the introduction of:

  1. a moratorium available to all companies to allow companies to formulate restructuring proposals without creditor pressure

  2. a new ‘restructuring plan’, being a new formal process to enable companies to cram down dissenting creditors

  3. a prohibition on enforcement of contractual provisions permitting termination for an insolvency event in contracts and licences for the supply of goods and services

  4. an increase in the maximum amount required to be set aside from floating charge realisations under the prescribed part

For analysis of the proposals produced at the time of the government’s response, see News Analyses: Government proposes legislation to enhance UK insolvency regime and Exploring the government’s response to

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