The Corporate Insolvency and Governance Bill (CIGB) was published on 20th May and is designed to help businesses in difficulty that need to restructure, to increase their chances of survival during these turbulent times.

Whilst wide-ranging reform of the insolvency legislation had been planned for some time, the unprecedented challenges caused by the COVID-19 pandemic forced the government to bring the timetable forward and squeeze a process that would normally take over a year into just six weeks.

The resulting 240 page Bill contains both temporary and permanent legislation that should support a culture of business rescue and restructuring during the current unusual times and beyond.

It should be noted, that given the speed with which the legislation was pulled together, the government has made it clear that it is likely to remain a work in progress with additions, amendments and corrections expected over time.  Furthermore there are a number of areas where the government appears to have left it to the Courts to resolve any issues which are not made clear by the new legislation.  Therefore trade creditors, landlords, lenders and directors will all need to take advice on their respective positions when operating with businesses in distress during the next few months. 

The legislation is likely to be approved at its reading in Parliament on 3rd June and, once given the green light by the House of Lords, could receive Royal assent at the end of June.

The Insolvency Service, who helped draft the legislation, have made it clear that, given the evolving nature of the COVID-19 pandemic and the continuing economic challenges it is throwing up, the temporary measures are almost certain to be extended beyond the summer.

We’ve summarised the key elements of the Bill below – full details can be seen here.

PERMANENT REFORMS

Company moratorium

Restructuring plan

Termination / “Ipso Facto” clauses

TEMPORARY MEASURES

As noted previously, a number of temporary measures have been brought in as a result of the COVID-19 pandemic. Whilst these provisions are due to run until 30th June (or one month after the Bill comes into force) it is expected, particularly in light of the recent extension of the Job Retention Scheme until October, that these measures will also be extended.

Suspension of wrongful trading liability

Statutory demands and Winding Up Petitions

Companies House formalities

A number of other changes have been introduced in relation to compliance with Companies House regulations:

If you feel any of our team of specialists can help then don’t hesitate to get in touch with your local Leonard Curtis contact.

Back to updates

Get in touch to find out more