Developments in the statutory provisions governing corporate entities during the Covid-19 crisis
On 20 May 2020, the UK Government introduced the Corporate Insolvency and Governance Bill (‘the Bill’) into Parliament.
The Bill is a much awaited development in corporate governance and insolvency, seeking to implement various short-term measures to help businesses address the challenges resulting from the impact of Covid-19, whilst also seeking to enact long-term changes in the insolvency regime.
As of 12 June 2020, the Bill has passed through the House of Commons and is at the Committee stage in House of Lords.
Some of the changes the Bill proposes in response to the economic challenges created by Covid-19 include:
- A suspension of personal liability claims against company directors, by liquidators and administrators, arising from ‘wrongful trading’ during this crisis where the directors have attempted to trade through the economic changes;
- Extending filing deadlines for public company accounts;
- Temporarily preventing creditors from filing statutory demands/winding up petitions for debts relating to the Covid-19 crisis; and
- Setting out certain restrictions on suppliers seeking to terminate a contract simply because of its own insolvency.
More ‘permanent’ changes to the insolvency regime include the proposal of:
- An establishment of an extended ‘company moratorium’, offering a longer time period for companies to be rescued as ‘going concerns’; and
- The introduction of a new procedure for formulating a ‘restructuring plan’, providing company directors with a wider pool of options.
Spring Law is actively monitoring the progress of the Bill and will be ready to advise on any legal changes that arise. Should the Bill later be implemented as law, we will also be publishing a detailed article on the key changes.
Please contact James Russell for enquiries: james.russell@springlaw.co.uk