02 Feb Updating the Corporate Insolvency and Governance Act 2020
The Corporate Insolvency and Governance Act 2020 brought in a series of permanent and temporary measures in order to help companies which may have been struggling during the covid pandemic. First enacted in June 2020, in September of that year some of the provisions were extended in order to give companies a breathing space whilst the crisis was ongoing.
Now a further extension has been granted in respect of some of the measures. These extensions, which came into force on 26 March 2021 include:
- Relaxation of moratorium entry requirements. The 2020 Act brought in a free-standing moratorium, a breathing space to give companies time to draw up a rescue or restructuring plan. This is an ongoing measure. But the Act also introduced a relaxation of entry requirements including the ability to enter a moratorium period even if the company had been subject to an insolvency procedure within the previous twelve months. This relaxation of entry requirements has been extended until 30 September 2021.
- Small suppliers exempt from obligation to supply. This measure has been extended until 30 June 2021, helping to ensure that small suppliers don’t have to supply goods or services under an ongoing contract if doing so would cause hardship to their business.
- Suspension of wrongful trading rules. This removes the threat of personal liability from directors who may otherwise fall foul of the wrongful trading regulations. The original measure expired on 30 September 2020. This new measure applies for the period 26 November 2020 to 30 June 2021.
- Protection from statutory demands and winding-up petitions. If an unpaid debt is found to be due to covid then statutory demands will be deemed to be void and winding up petitions set aside. These temporary measures, brought in by the original 2020 Act and subsequently extended to March 2021, have now been further extended until 30 June 2021.
However, it is worth noting that some temporary measures introduced by the 2020 Act have not been further extended. In particular, the act introduced automatic filing date extensions in respect of accounts, confirmation statements, event-driven filings and mortgage charges. This measure expires on 5 April 2021 and will not be renewed; requiring companies to meet their normal filing deadlines. There is a provision for companies to apply for a further three month extension but whether this is granted will depend on whether the normal deadline has already been extended for a period.