Corporate Insolvency & Governance Act 2020: Termination on Insolvency in Supply Contracts

The Corporate Insolvency and Governance Act 2020 (the “2020 Act”) came into effect on 26 June 2020. Whilst this new law has been pushed through the legislative process to tackle the economic fallout of COVID-19 restrictions in the United Kingdom, it is also set to make permanent, widespread changes to the insolvency regime in the UK and relevant supply chains. These are perhaps the most significant amendments in recent years.

One of the key changes in the 2020 Act will be a new restriction on suppliers terminating a supply contract in the event that the other party is subject to insolvency proceedings, which presents a considerable departure from common practice in commercial contracts. Although there are many key differences between the laws on insolvency in England & Wales and Scotland, these new provisions apply throughout the UK.

In this guide, we explain what the changes under the 2020 Act mean for suppliers and what options are available to you if one of your customers/clients faces a relevant insolvency event. We also share some practical advice for contract management to assist you in mitigating the associated risks in your supply chains.

Download our practical guide to Termination on Insolvency in Supply Contracts

This guide was co-authored by Fergus Lawrie.

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