UK government introduces Corporate Insolvency and Governance Bill

UK government introduces Corporate Insolvency and Governance Bill

The government introduced the Corporate Insolvency and Governance Bill in Parliament, which will put in place a series of measures to amend insolvency and company law to support business to address the challenges resulting from the impact of Coronavirus (COVID-19).

The Bill consists of 6 insolvency measures and 2 corporate governance measures.

The insolvency measures will provide vital support to businesses to help them through this period of instability.

The corporate governance measures will introduce temporary easements and flexibility to businesses where they are coping with reduced resources and restrictions.

This Bill will do this through:

– introducing a new moratorium to give companies breathing space from their creditors while they seek a rescue

– prohibit termination clauses that engage on insolvency, preventing suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process

– introducing a new restructuring plan that will bind creditors to it

– enabling the insolvency regime to flex to meet the demands of the emergency

– temporarily removing the threat of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency

– temporarily prohibiting creditors from filing statutory demands and winding up petitions for coronavirus related debts

– temporarily easing burdens on businesses by enabling them to hold closed Annual General Meetings (AGMs), conduct business and communicate with members electronically, and by extending filing deadlines

– allowing for the temporary measures to be retrospective so as to be as effective as possible

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