Covid-19 | UK | A freestanding moratorium and cross-class cram-down: features of the new UK insolvency law
16 June 2020
Client Alert | UK | Features of the new UK insolvency law
The Corporate Insolvency and Governance Bill (the "Bill") was introduced in the House of Commons on 20 May 2020. The Government had already announced plans to introduce new insolvency restructuring measures in August 2018. On 28 March 2020, in light of the COVID-19 outbreak, the Business Secretary announced that the Government would introduce these measures at the earliest opportunity, together with temporary COVID-19-related measures to protect companies from the aggressive use of statutory demands and winding-up petitions. As such, the Bill consists of permanent and temporary changes to insolvency law and corporate governance.
The Department for Business, Energy & Industrial Strategy describes the three main objectives of the Bill as follows:
introduce new corporate restructuring tools to the insolvency and restructuring regime to give companies the breathing space and tools required to maximise their chance of survival;
temporarily suspend parts of UK insolvency law to allow directors to continue trading through the emergency without the threat of personal liability for wrongful trading and to protect companies from creditor action; and
amend company law and other legislation to provide companies and other bodies with temporary easements on company filings and AGMs.
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