The Corporate Insolvency and Governance Bill passed through the House of commons on Wednesday 3 June 2020 and proceeded to the House of Lords on Tuesday 9 June 2020. The expectation is that it will reach its third reading in the House of Lords on 23 June 2020.
Major changes to the current UK corporate rescue regime and options available to businesses affected by COVID-19 are imminent.
The Bill will introduce new corporate restructuring tools for insolvency professionals to use to help companies that require a breathing space and restructuring plan to survive.
Key aspects of the bill in relation to restructuring are:
- A new Moratorium available for companies to protect their business and assets whilst they seek a rescue package.
- Suppliers will not be able to terminate contracts to supply to companies subject to a Moratorium.
- There will be a new form of restructuring plan which will have the power to bind specific classes of creditors who do not agree.
- The threat of personal liability for wrongful trading for directors who choose to work to rescue their Company affected by the COVID-19 crisis will be temporarily removed.
- The Bill will suspend the rights of creditors to issue statutory demands and winding up petitions in relation to COVID-19 debts.
A more detailed summary of the provision of the Bill and how the new regime will work can be found here.
The Insolvency Law measures in the Bill are “reserved” in relation to Wales, in some respects devolved in Scotland and are fully transferred to Northern Ireland.
If you would like further information, please get in touch.
The information in this update should not be regarded as financial advice. This is based on our understanding on 16 June 2020. Laws and tax rules may change in the future.