Government introduces Corporate Insolvency and Governance Bill

Released 21 May 2020

The Government has introduced the Corporate Insolvency and Governance Bill in Parliament, to put in place a series of measures to amend insolvency and company law to support businesses impacted by COVID-19.

The corporate governance measures will introduce temporary easements and flexibility to businesses where they are coping with reduced resources and restrictions.

This Bill will do this through:

introducing a new moratorium to give companies breathing space from their creditors while they seek a rescue;

prohibit termination clauses that engage on insolvency, preventing suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process;

introducing a new restructuring plan that will bind creditors to it;

enabling the insolvency regime to flex to meet the demands of the emergency;

temporarily removing the threat of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency;

temporarily prohibiting creditors from filing statutory demands and winding up petitions for coronavirus related debts;

temporarily easing burdens on businesses by enabling them to hold closed Annual General Meetings (AGMs), conduct business and communicate with members electronically, and by extending filing deadlines; and

allowing for the temporary measures to be retrospective so as to be as effective as possible.

Further information on the Bill can be found at https://www.gov.uk/government/news/government-introduces-legislation-to-relieve-burden-on-businesses-and-support-economic-recovery.

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