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Further Extension to Corporate Insolvency COVID-19 Measures

The Government has again extended the operation of various Coronavirus (COVID-19) related measures covering corporate insolvency.

Originally introduced at the beginning of the pandemic, under the Corporate Insolvency and Government Act 2020, the following temporary measures have been extended until 30 June 2021 under the Corporate Insolvency and Governance Act (Coronavirus) (Extension of the Relevant Period Regulations (2021) (the “Regulations”):

  • The wrongful trading liability rules will continue to be suspended. A director will not be responsible for any worsening of a company’s financial position during the periods 1 March 2020 to 30 September 2020 and 26 November 2020 to 30 June 2021.
  • The blanket restriction, in place since 27 April 2020, on presenting winding-up petitions based on statutory demands served on or after 1 March 2020, will continue.
  • Restrictions on presenting winding up petitions and winding up orders will continue.
  • Small suppliers will remain excluded from the prohibition on terminating a supply contract during a customer’s insolvency.
  • Temporary modifications and relaxation to the requirements for the new moratorium procedure set out in schedule 4 of the Corporate Insolvency and Governance Act 2020 will continue until 30 September 2021.

Despite the government’s delayed response to the extension of insolvency measures, which caused uncertainty as to whether the extension would happen, the Regulations do not come as a complete surprise as they mirror the extensions currently in place for lease forfeiture and repossession restrictions which have been extended until 30 June 2021.

Due to the COVID-19 pandemic, many otherwise economically stable businesses are experiencing substantial difficulties with trading, which causes concerns over a rise of insolvencies. It will be interesting to see whether there are any further extensions to the Regulations, which end shortly after the final ease of all general lockdown restrictions in England. Questions will be raised as to whether the Regulations will provide enough time for businesses to get back on their feet and delay creditors who may be looking to approach them soon after 30 June 2021.

The Regulations can be found here.


For more information or advice on this or any other insolvency-related issue, please contact Victoria Dunstall or Annabel Whittaker directly, call us on 0115 9 100 200 or click here to send an email

Posted on April 7, 2021

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