Corporate Insolvency and Governance Act 2020

Spurred on by the coronavirus (COVID-19) pandemic and a desire to mitigate the effect on businesses of the government-imposed lockdown, the government published the Corporate Insolvency and Governance Bill on 20 May 2020. The Bill received Royal Assent on 25 June 2020, resulting in the Corporate Insolvency and Governance Act 2020 (CIGA 2020).

The government previously consulted on proposed changes to the UK’s insolvency regime in 2016 and published its response on 26 August 2018 (see News Analysis: Exploring the government’s response to the insolvency and corporate governance consultation). See also Practice Note: Reform of UK insolvency laws.

CIGA 2020 largely follows the conclusions set out in the government’s response, together with temporary provisions to mitigate the effect on businesses as a result of the coronavirus lockdown.

The main changes of interest to

To view the latest version of this document and thousands of others like it, sign-in with LexisNexis or register for a free trial.

TAKE A FREE TRIAL

Latest Restructuring & Insolvency News

Interpreting ‘carrying on business’ for bankruptcy petition jurisdiction (Bridging Finance Inc v Lyons)

Restructuring & Insolvency analysis: A bankruptcy petition can be presented against an individual provided that, among other things, they have ‘carried on business in England and Wales’ in the three years preceding the petition. In Lyons, the court decided that a bankruptcy petition could be presented against a Bahamas-based debtor on the basis of his personal dealings with one property in England. It rejected an argument that the condition was satisfied because the Bahamas-domiciled debtor had an ownership/control interest in more than 30 companies incorporated in England and Wales. This judgment clarifies, among other things, the meaning of ‘carrying on business in England and Wales’ for the purposes of a bankruptcy petition. Written by Aziz Abdul, legal director and Claire Robinson, managing associate at Addleshaw Goddard LLP.

Insolvency, declarations of trust, loan agreements, artificial asset protection, sham transactions, transactions defrauding creditors, interspousal asset transfers, change of position defence and wife’s entitlement to share of husband’s assets (Sayers v Dixon)

Restructuring & Insolvency analysis: The court held that six declarations of trust (DoTs) executed by the transferor (Mr Dixon) in favour of his wife (Mrs Dixon) constituted transactions defrauding his creditors within the meaning of section 423 of the Insolvency Act 1986 (IA 1986) and that two of them, purporting to transfer all his future assets and income to Mrs Dixon, along with an accompanying loan agreement, were shams which were void and ineffective. It set aside the DoTs and ordered Mrs Dixon to restore the value of three transferred properties (which had been converted into £551,589 cash) to Mr Dixon’s trustees in bankruptcy (trustees) together with interest of £101,726. It also ordered an account to be taken of the funds that had been transferred to Mrs Dixon or on her behalf by Mr Dixon over the seven years between the date of the DoTs and his bankruptcy. The court dismissed Mrs Dixon’s defence of change of position to the trustees’ claim for restoration, finding that even if such a defence were generally available (which is unclear), she had not acted in good faith and could not rely on it. It also dismissed her defence that, having been married to Mr Dixon for many years, she was entitled to half his assets and/or an entitlement to a share of them by virtue of a right to be maintained. Written by Jonathan Lopian, barrister at New Square Chambers, who acted for the successful claimants.

Insolvency Service reports disqualification of Scottish machinery firm director for £1.5m VAT fraud

The Insolvency Service has reported the disqualification of David Smith, former director of FB Realisations Limited (previously Balgownie Limited), from acting as a company director for 11 years following investigations into VAT fraud. Smith admitted to submitting false VAT returns between 2019–2022, resulting in £1.57m of undeclared VAT to HMRC. The Scottish machinery firm entered administration in March 2024 owing £3.16m to creditors. The disqualification undertaking commenced on 21 July 2025 and bans Smith from involvement in company promotion, formation, or management without permission from the court.

The limits of the equity of exoneration) spousal relationships and direct benefit (Armstrong v Harrow)

Restructuring & Insolvency analysis: This case involved an application by trustees in bankruptcy to recover sums from the sale of a property formerly jointly owned by the bankrupt and his ex-wife during their marriage. The ex-wife argued that she was entitled to retain the full proceeds based on the equity of exoneration, claiming the secured loans discharged from the sale were taken solely for the bankrupt’s benefit. The court examined the principles governing equity of exoneration and held that, as the ex-wife was a director and shareholder of the debtor company (and had actively participated in the transactions—she had derived a direct benefit from the loans. As such, she was treated as a joint principal debtor, and her claim to be indemnified from the bankrupt’s share failed, save for one small exception. The decision underscores the limited scope of equity of exoneration where both parties have meaningful involvement in a borrowing entity, largely setting aside the old-fashioned principles of married women's property rights from which the equity of exoneration derives. Written by Stephen Alexander, partner at Mourant and Roxanna Lackschewitz-Martin, associate at Mourant.

View Restructuring & Insolvency by content type :

News