The Corporate Insolvency and Governance Act 2020 (the “Act”) has received Royal Assent and is now in force (please click here to review).
We previously reported on the main aspects of the new legislation after the draft Bill was placed before Parliament (please click here to review).
The Act largely retains the wording of the Bill but a number of changes have been made following debate in both Houses of the Parliament. These include many of the temporary provisions (for example in relation to wrongful trading, serving statutory demands and presenting winding-up petitions) being extended to 30 September 2020 from the original date of 30 June 2020. Another notable change to the moratorium rules prevents lenders from accelerating their debt during the moratorium in order to claim ‘super priority’ status if the company subsequently enters an insolvency process.
Since the text of the Act has only just been published we will be carefully reviewing its content and will provide an update in due course.
Given the speed with which the legislation was rushed through Parliament (just over a month), and since the Act creates new insolvency regimes (in particular the moratorium and restructuring procedures), it will be interesting to see how the insolvency profession, as well as businesses in general, react to this important piece of legislation and whether it will achieve the stated aim of rescuing the economy at this difficult time.
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