Corporate insolvency bill: a vital lifeline for business
The Corporate Insolvency and Governance Act 2020 received Royal Assent on Friday 26 June 2020. Both the permanent and temporary measures could be a valuable lifeline as the downturn continues, but worth remembering should a customer not be paying you or a supplier delaying goods or services.
With the Corporate Insolvency and Governance Act becoming law on Friday, businesses have more options to help them through the COVID-19 crisis.
Most notable is a new standalone moratorium option for companies in financial difficulty. The new rules give businesses a minimum of 20 days of protection from certain creditor actions, with an insolvency practitioner acting in the role of monitor.
The company’s directors remain in charge of the business, and are able to extend the moratorium period by a further 20 days if, after day 15 of the initial period, they still need time to formulate a turnaround plan, without the approval of creditors. Any extension beyond 40 days requires creditor approval. The moratorium puts the focus on company recovery rather than asset realisation.
The moratorium can be extended up to a year with creditor support, which means it could act as a vital lifeline for businesses that are struggling due to the COVID-19 crisis. On top of the moratorium, the Bill also introduces temporary measures to ease pressure on businesses as they try to find a path through lockdown.
The Act also provides temporary relief until 30 September 2020 from being subject to a winding up petition and from wrongful trading provisions where a business can demonstrate its difficulties arise from trading conditions arising from the COVID-19 pandemic.
If you are new to Revel and are keen to find out more, please call our consultant Will Bolter FCCA MAAT ATT (our designated COVID-19 response advisor) on 01428 555100 or contact us by email here.