Temporary protections against business insolvency extended
The government is extending the temporary measures it introduced to protect businesses from insolvency during the COVID-19 pandemic.
The measures are contained in the Corporate Insolvency and Governance Act and were due to expire on 30 September 2020. They will now continue until the end of the year and in some cases, into next year.
- companies and other qualifying bodies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 30 December 2020. This means that shareholders can continue to examine company papers and vote on important issues remotely.
- statutory demands and winding-up petitions will continue to be restricted until 31 December 2020 to protect companies from aggressive creditor enforcement action as a result of coronavirus related debts.
- termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. However, small suppliers will remain exempted from the obligation to supply until 30 March 2021.
- the modifications to the new moratorium procedure, which relax the entry requirements to it, will also be extended until 30 March 2021. A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding up petition. The temporary moratorium rules will also be extended to 30 March 2021.
Business Minister Lord Callanan yesterday said: “It is vital that we continue to deliver certainty to businesses through this challenging time, which is why we are now extending these important and necessary measures to protect companies from insolvency.
“Through this measure, we want to ensure businesses are able to not only come through this testing period, but also to plan, adapt and build back better.”
Please contact Neil O'Callaghan if you would like advice about debt collection, credit control and insolvency issues.