Corporate Insolvency and Governance Act extends temporary measures
As we are now aware, from the coverage in the press, the Corporate Insolvency and Governance Act (the “Act”) received Royal Assent on 25 June 2020 and is now in force.
The Act has been fast-tracked to royal assent to deal with the ongoing financial issues that many businesses of all sizes and types have encountered due to the COVID-19 pandemic. The Act contains both long awaited permanent reforms to Insolvency law and also those necessary measures, albeit of a more temporary nature, that have been seen as required by business, as the government attempts to deal with the problems thrown up by the current Covid-19 crisis.
I dealt with the key measures of the proposed Act in my most recent post, and, in the main, the Act has made it to royal assent relatively unchanged. That said, there was a principal change to the proposed legislation when it received royal assent. That principal change to the Act is the period of protection for the temporary measures – the relaxation of wrongful trading liability, the prohibition on statutory demands and winding-up petitions – which has been amended and extended so that now the protection will run through to 30 September 2020.
The Act is seen, by the government and the business world, as a crucial way of allowing the businesses and companies that may well have failed, due to the Covid-19 pandemic, under the normal provisions of insolvency law to take advantage of the temporary measures that have been included within the Act and that will be in place until at least 30 September. The hope is that these businesses will be able to continue to trade and to grow, under the protection of the temporary measures set out in the Act, and hopefully move forward into the post Covid-19 economic world with the strength and plans to survive into the long term.
Richard Ludlow is a Partner and specialist insolvency lawyer who leads Rix & Kay’s Dispute Resolution Team based in Sevenoaks and Brighton & Hove. For more information e email@example.com t. 01732 441695