Corporate Insolvency and Governance Act
Law - UK - insolvency - COVID-19.
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.
- Balance sheet insolvent
- Cash flow insolvent
- Chapter 11
- Company voluntary arrangement
- Cost of financial distress
- House of Commons
- Individual Voluntary Arrangement
- Insolvency practitioner
- Insolvency Service
- London Approach
- Restructuring plan
- Scheme of arrangement
- Statement of affairs
- Statutory demand
- Termination clause
- Voluntary liquidation
- Winding up petition
- Wrongful trading