New Coronavirus insolvency legislation proposed
The Corporate Governance and Insolvency Bill (the Bill) has been introduced in Parliament to support businesses that are struggling as a result of the Coronavirus pandemic.
The Bill includes six new insolvency and two corporate governance measures that seek to address the challenges that businesses are facing.
The Bill includes:
- A new moratorium to give companies breathing space from their creditors while they seek a rescue.
- A law that prohibits 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.
- A new restructuring plan that will bind creditors to it.
- A temporary suspension of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency.
- A ban on creditors filing statutory demands and winding up petitions for Coronavirus related debts in certain circumstances.
- Rules that ease the 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 for:
– confirmation statements
– annual accounts
– registrations of charges (mortgage)
– event-driven filings, such as a change to your company’s directors or people with significant control.
These measures will be applied retrospectively so as to be as effective as possible. It is hoped that the Bill and its measures will enable the insolvency regime to flex to meet the demands of the current emergency.
The Bill, introduced on 20 May, will now make its way through Parliament. Many of the measures in the Bill will need secondary legislation before they come into force, and this will be introduced in due course. Nothing will change until legislation is formally introduced.