Corporate Insolvency and Governance Act

Law - UK - insolvency - COVID-19.

(CIGA).

The UK's Corporate Insolvency and Governance Act 2020 was enacted in response to COVID-19.

It also accelerated a number of other reforms to UK insolvency law.

UK business rescue culture aligning with US & Chapter 11

"The permanent insolvency measures contained in the Act (previously announced by the Government, and in development before Covid-19) mark a major change in UK insolvency law towards a business rescue culture more in line with U.S. insolvency (chapter 11)."

UK House of Commons Library - 1 July 2021.

Among other changes, the Act:

• Introduced a temporary credit moratorium for businesses, to give them more time to seek a rescue.
• Prohibited termination clauses engaging on insolvency, to prevent suppliers ceasing supply or asking for additional payments while companies entered rescue proceedings.
• Introduced a new business restructuring plan procedure.
• Temporarily removed the threat of personal liability for wrongful trading for directors seeking to keep companies afloat during the crisis.
• Temporarily prohibited creditors from filing statutory demands or winding up petitions for COVID-19 related debt.

The temporary measures mostly expired in 2021, with a further transitional period for some of them up to 31 March 2022.

See also

• Balance sheet insolvent
• Cash flow insolvent
• Chapter 11
• Company voluntary arrangement
• Cost of financial distress
• COVID-19
• Creditors
• House of Commons
• Individual Voluntary Arrangement
• Insolvency
• Insolvency practitioner
• Insolvency Service
• London Approach
• Moratorium
• Restructuring plan
• Scheme of arrangement
• Solvency
• Statement of affairs
• Statutory demand
• Termination clause
• Voluntary liquidation
• Winding up petition
• Wrongful trading

External link

Corporate Insolvency and Governance Act 2020 - UK House of Commons Library - research briefing