Corporate Insolvency and Governance Act

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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


External link

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