Several measures included in the Corporate Insolvency and Governance Act will be extended to support businesses in distress due to the ongoing Coronavirus pandemic.
Changes designed to protect businesses from insolvency were introduced in the Corporate Insolvency and Governance Act earlier this year, but many were due to expire on 30 September 2020.
In light of further restrictions placed on businesses due to the growing infection rate in the UK, these measures have been extended.
One of the measures to be extended is the restriction on statutory demands and winding-up petitions, which will now remain in place until 31 December 2020 to protect companies from “aggressive creditor enforcement action” due to COVID-related debts.
The Government has also confirmed that termination clauses are still prohibited, which prevent suppliers from ceasing their supply or asking for additional payments, while a company is going through a rescue process.
However, smaller suppliers will remain exempted from the obligation to supply until 30 March 2021, allowing them to protect their business if necessary.
Under the extension, the amendments to the new moratorium procedure, which is designed to give businesses a breathing space from creditors, will also be extended until 30 March 2021.
These allow a company to enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months.
Finally, companies and other qualifying bodies with obligations to hold annual general meetings (AGMs) will continue to have the flexibility to hold these meetings virtually until 30 December 2020, allowing shareholders to examine company papers and vote on important issues remotely.
Business Minister Lord Callanan 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.”
If you are concerned that any of these measures may affect your businesses or you would like to discuss how you can use them to support your business, please contact us.