Insolvency law announced to protect UK companies during coronavirus
The new Corporate Insolvency and Governance Bill was introduced into parliament this week and will create more opportunities to save companies who are experiencing financial difficulty as a result of Covid-19.
It is designed to offer enhanced protection from creditor action during the pandemic. UK companies will also have access to new tools to restructure their debt in order to keep operating through the crisis.
There are three permanent measures to the bill it will:
- Enable a “company moratorium” whereby struggling companies will be given formal breathing space for 20 business days, extendable to 40 days, to pursue a rescue plan without creditors being able to take a legal action.
- Change termination clauses in supply contracts so that when a company enters an insolvency or restructuring procedure its suppliers cannot use contractual terms to stop supplying or put up prices.
- Enable companies in financial difficulty, or their creditors, to form a “restructuring plan”, which opposing creditors would be forced to sign up to if it is sanctioned by a court as “fair and equitable”.
Jason Elliott head of business recovery at Cowgills said: “This legislation is very much welcomed.
“The coronavirus pandemic has caused a great deal of harm to many businesses in a number of sectors that were historically successful and profitable.
“This bill will ensure that those viable companies are afforded the requisite time to enable them to seek professional restructuring advice which will ultimately give them the best opportunity to avoid a formal insolvency process.”
Restructuring can appear to be a daunting and time-consuming task. Here at Cowgills we have years of expertise across a full service offering which ensures all aspects of your business are considered. If you or any of your clients believe that restructuring may be an option then please do not hesitate to contact Jason directly Jason.firstname.lastname@example.org.
The information was correct at time of publishing but may now be out of date.