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Robin Henry
Partner - Head of Dispute Resolution Services
Corporate recovery, restructuring & insolvency
On 26 March 2021 insolvency measures supporting businesses during the pandemic and aiding their recovery were extended.
Once again, the Government has legislated to extend existing insolvency temporary measures through the CIGA (Coronavirus) (Early Termination of Certain Temporary Provisions) Regulations 2020 and the CIGA (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020. Additionally, the restrictions on forfeiture by landlords have been extended.
On 26 March 2021 the following insolvency measures supporting businesses during the pandemic and aiding their recovery were extended:
These will continue to be restricted to protect companies from creditor enforcement action until 30 September 2021.
A winding-up petition cannot be presented against a company based on a statutory demand that was served between 1 March 2020 and 30 September 2021.
A winding-up petition also cannot be presented between 1 March 2020 and 30 September 2021 based on a company’s inability to pay its debts unless (1) the creditor has reasonable grounds for believing that Covid-19 has not had a financial effect on the company, or (2) the company would have been unable to pay its debts even if COVID 19 did not have a financial effect on the company.
Small suppliers remain exempt until 30 June 2021 from the new provisions introduced by section 233B of the Insolvency Act 1986 which generally prevent a supplier from relying on a contractual termination clause in order to cease supplying goods or services to a company because it has gone into a formal insolvency process.
A small supplier for these purposes is one which satisfies two of the following three conditions: (1) a turnover of not more than £10.2 million; (2) a balance sheet total of not more than £5.1 million; and (3) employees of no more than 50.
The relaxation of directors’ liability, under wrongful trading provisions, for any worsening of a company’s financial position has been extended to 30 June 2021.
The temporary rules relating to a moratorium under Part A1 of the Insolvency Act 1986 have been extended to 30 September 2021. These include:
The Government has announced the extension of commercial lease forfeiture restrictions for another nine months, from the initial deadline of 30 June 2021 to 25 March 2022.
Under these provisions, commercial landlords are prevented from forfeiting commercial leases or evicting their tenants for non-payment of rent.
It is possible that these restrictions may be extended again as The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Change of Expiry Date) Regulations 2021 (SI 2021/441) extend the power to amend insolvency and corporate governance legislation for periods of up to six months, for Covid-19 reasons, until 29 April 2022.
18 June 2021
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Partner - Head of Dispute Resolution Services
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Partner - Head of Dispute Resolution Services
Specialising in Banking & financial disputes, Commercial disputes and Corporate recovery, restructuring & insolvency
Paralegal
Specialising in Commercial disputes and Banking & financial disputes
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