The Corporate Insolvency and Governance Act has received Royal Assent, and came into force on 26 June, marking the largest change to the UK’s corporate insolvency regime in more than 20 years
The legislation has introduced new corporate restructuring tools and temporary easements, with the aim of giving distressed businesses the breathing space they need to get advice and seek a rescue.
One of its key provisions is the introduction of the new role of a monitor to oversee the corporate moratorium it introduces – an extendable 20 working day period giving businesses protection from creditor action while they seek professional restructuring advice.
A monitor must be a licenced insolvency practitioner and the Insolvency Service has provided guidance on their role and responsibilities.
The Act also extends the suspension of termination clauses when a company enters into an insolvency procedure and introduces a new restructuring plan that has the ability to bind creditors to it.
In addition, in response to the current pandemic, the Act also provides temporary relief until 30 September 2020 from being subject to a winding up petition and from wrongful trading provisions where a business can demonstrate its difficulties arise from trading conditions arising from the Covid-19 crisis.
Bob Pinder, director at the ICAEW, said: ‘This Act contains both short-term measures and long-term reforms, and our licensed insolvency practitioners will have a key role to play as the changes take effect.
‘Our licensed insolvency practitioners are responsible professionals who are committed to helping companies restructure and survive where possible, and they will take every step necessary to ensure the legislation works in the best possible interests of all stakeholders.
‘This legislation has been designed to save businesses and jobs, and we hope it's a success.’