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 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 enter 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 (expired June 2021).
  • Temporarily prohibited creditors from filing statutory demands or winding up petitions for COVID-19 related debt.


The temporary measures were originally scheduled to end on 30 September 2020.

They were subsequently extended to September 2021 depending on the measure.


See also


External link

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