Corporate Insolvency & Governance Act 2020: Extension of temporary measures

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 came into force on Tuesday, 29 September 2020. The Regulations extend some of the temporary provisions put in place by The Corporate Insolvency & Governance Act 2020 (“the 2020 Act”) which came into force on 26 June 2020. The 2020 Act aimed to support businesses affected by COVID-19 and the new Regulations are an acknowledgement that additional help over a more prolonged period is necessary in these unprecedented times.

The main extensions are as follows:

1. Statutory Demands and Winding Up PetitionsMeasures extended to 31 December 2020

In short, creditors cannot proceed with a winding up petition on account of an outstanding statutory demand served between 1 March 2020 and 31 December 2020. A creditor can only present a petition for the winding up of a company if it has a reasonable belief that the company’s business has not been adversely affected by COVID-19 or that it would not have been able to meet the demand, regardless of the effects of the pandemic.

2. Termination by suppliers – exclusion for “small suppliers” – Measures extended to 30 March 2021

Under the 2020 Act suppliers are unable to terminate a supply contract solely on the basis of the other party to the contract entering into an insolvency process. This extension means that “small suppliers” (defined in the legislation as any entity that can satisfy 2 of the following criteria: (a) Turnover of less than £10.2 million; (b) Balance sheet total of less than £5.1 million; (c) No more than 50 employees), continue to be exempt from this prohibition on termination.

3. Company Moratorium for restructuringMeasures extended to 30 March 2021

A company can enter a moratorium, allowing Directors to retain control of the day-to-day running of the business while considering restructuring options.

4. Wrongful trading – No extension

The temporary suspension of directors’ liability for wrongful trading will end on 30 September 2020. Directors should therefore be very careful not to continue to incur liabilities in circumstances where there is no reasonable prospect of the company avoiding an insolvency process.

How can we help?

If you have any queries in relation to The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020, please contact Leon Breakey or another member of our Commercial Dispute Resolution team.

This article was co-written by Michael Gallagher.

Latest updates from @MacRoberts

  • Huge congratulations to Rebecca Cox in our Corporate Finance team who has been shortlisted for the Rising Star of t… 1 hour ago
  • MacRoberts is delighted to be shortlisted at this year’s Scottish Legal Awards! We're up for Firm of the Year & t… 20 hours ago
  • Have you and your partner been considering moving in together? Are you aware of the legal implications that this ma… 29/07/2021
  • Following a consultation in 2019, the UK Government has outlined its intention to introduce a mandatory duty on emp… 29/07/2021
  • Our award-winning Family Law team can help you and your partner through difficult situations by providing support w… 27/07/2021
  • To celebrate the Olympic Games in Tokyo, we're delighted to launch our latest sporting challenge in support of our… 23/07/2021
  • MacRoberts is recruiting! We are currently looking for a Real Estate Planning Solicitor to join the MacRoberts tea… 23/07/2021
  • The countdown is on! With just 100 days to go, we’re looking forward to #COP26 in Glasgow! ♻️ As a firm accredite… 22/07/2021
  • Has lockdown led you to consider a move to the countryside? From discussing a possible purchase to obtaining the… 22/07/2021
  • Have you seen our latest vacancies? 💼 We currently have opportunities in various departments across the firm. Fin… 21/07/2021
  • Acas has published new guidance for employers with helpful information on #flexibleworking & #hybridworking. With t… 20/07/2021
  • Busting the myth that a career in law is only for the privileged few: @marikaflawyer is speaking at this morning’s… 19/07/2021
  • MacRoberts is recruiting! We are currently looking for a Support Services Assistant to join our team in Edinburgh.… 16/07/2021
  • MacRoberts is pleased to have been part of the team advising @HV_Systems in its £5m capital boost from Beehive Equi… 15/07/2021
  • MacRoberts is recruiting! We are currently looking for a NQ Solicitor to join our Conveyancing & Private Client te… 14/07/2021