The UK Government has introduced the Corporate Insolvency and Governance Bill (the ‘Bill’) in Parliament, which will put in place a series of measures to amend insolvency and company law to support business to address the challenges resulting from the impact of coronavirus (COVID-19).
The Bill consists of 6 insolvency measures and 2 corporate governance measures. The insolvency measures will provide vital support to businesses to help them through this period of instability.
The Bill’s 3 main purposes are:
- to introduce new corporate restructuring tools to the insolvency and restructuring regime to give companies the breathing space and tools required to maximise their chance of survival
- to temporarily suspend parts of insolvency law to support directors to continue trading through the emergency without the threat of personal liability and to protect companies from aggressive creditor action
- to amend Company Law and other legislation to provide companies and other bodies with temporary easements on company filing and annual general meetings (which will extend to charitable incorporated organisations and mutual societies) thus allowing them to focus their resources on continuing operations in this uncertain time.
The measures in the Bill will support businesses, and where applicable charities and mutual societies, through the coronavirus emergency by:
- introducing a new moratorium to give companies breathing space from their creditors whilst they seek a rescue
- ensuring companies going through a rescue process continue to receive supplies by prohibiting the use of termination clauses by suppliers, subject to safeguards for suppliers facing hardship and a temporary exemption for small firms during the coronavirus emergency
- introducing a new restructuring plan that will bind creditors to it
- 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 AGMs, conduct business and communicate with members electronically, and by extending filing deadlines
- allowing for the temporary measures to be retrospective from their respective dates of announcement so as to provide as much relief to business as possible.
Please follow the link for further information and to obtain a copy of the Bill.