COVID-19 Update
COVID-19 Update: We are open for business. All our legal teams are available to help you via video and phone calls. We are also able to offer pre-booked COVID-secure face to face meetings. More information is available here.
Close
Call us today 0115 9100 200

Extensions to COVID-19 Insolvency Regulations

As a follow up to our previous articles on the Corporate Insolvency & Governance Act 2020 (CIGA 2020) and winding up petitions and coronavirus (COVID-19), this article sets out the latest extensions to COVID-related measures that were set to expire at the end of September 2020.

The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 (“the Extension Regulations”) was brought into force on 24 September 2020 and extend the operation of a several significant Coronavirus related restrictions previously set out in CIGA 2020.

These extensions may provide welcome relief for businesses dealing with the economic impact of COVID-19 and allows them some additional breathing space to keep trading while they consider rescue options should that be necessary.

It is important to note that the provisions relating to the ‘suspensions of liability for wrongful trading’ have not been extended and expired as planned at the end of September.

 

Statutory Demands and Winding Up Petitions

The restrictions on statutory demands and creditors winding up petitions have been extended and will now be in force until 31 December 2020. This means that unpaid statutory demands served between 1 March 2020 and 31 December 2020 cannot be used as the basis for a winding up petition. In addition, creditors may not present a winding up petition, without ‘reasonable grounds for believing’ that the debtor company would have become insolvent regardless of Coronavirus.

 

Validation Orders

The Extension Regulations alter the meaning of “relevant period” defined in schedule 10 of CIGA 2020. The effect of this is to extend the period for which validation orders are not required for companies subject to winding up petitions. The extended period lasts until 31 December 2020.

 

Company Meetings

A company’s normal obligations concerning board meetings, voting arrangements, and other related provisions were temporarily relaxed by CIGA 2020. The Extension Regulations seek to extend the “Relevant Period” associated with these provisions which will now be in force until 30 December 2020.

 

Ipso facto Rules

Small suppliers are temporarily exempt from the “Ipso Facto Rules” which prohibit suppliers of goods and services from terminating their contracts with companies subject to insolvency procedures. This exemption has been extended by a further 6 months and will now be in place until 30 March 2021.

 

Moratorium regime

The new moratorium procedure was temporarily amended by CIGA 2020 to make it easier for eligible companies to use this. The Extension Regulations have extended the “relevant period” in this respect with the temporary amendments due to remain in force until 31 March 2021.

 

For more information or advice on any insolvency issue, please contact Annabel Whittaker or any member of our specialist Insolvency team on 0115 9 100 200 or click here to send an email.

Posted on October 14, 2020

This website uses cookies to enhance your browsing experience... moregot it