The government has given businesses much-needed breathing space with extension of insolvency measures under the Corporate Insolvency and Governance Act to relieve pressure on businesses dealing with coronavirus
The government announced it intends to extend the power (granted through the Corporate Governance and Insolvency Act) to make temporary amendments or modify the effects of corporate insolvency and governance legislation for an additional year until April 2022.
The government laid the regulations on 11 February 2021 in Parliament ahead of the power expiring on 30 April 2021.
The government last updated the rules in December 2020, announcing a number of covid-19 related measures to support businesses.
At the time, it reinstated the temporary removal of the threat of personal liability for wrongful trading from directors until 30 April 2021. Previously, the deadline was the end of 2020.
Termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process.
The modifications to the new moratorium procedure, which relax the entry requirements to it, will also be extended until 30 March 2021.
A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding up petition. The temporary moratorium rules will be extended to 30 March 2021.
The government also announced that companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 31 March 2021. This means that shareholders can continue to examine company papers and vote on resolutions remotely.
Business minister Lord Callanan said: ‘It is vital that we continue to deliver certainty to businesses through this challenging time, which is why we are now extending these important and necessary measures to protect companies from insolvency.
‘Through this measure, we want to ensure businesses are able to not only come through this testing period, but also to plan, adapt and build back better.’