uk insolvency act 2020

Explanatory Notes were introduced in 1999 and accompany all Public Acts except Appropriation, Consolidated Fund, Finance and Consolidation Acts. Corporate Insolvency and Governance Act 2020. The Corporate Insolvency and Governance Act 2020: Changes to UK Insolvency Laws. The Act provides that when considering the contribution that a director is required to make to company assets, the court is to assume the director is not responsible for any worsening of the financial position of a company or its creditors during the period 1 March 2020 to 30 September 2020 and during the period from 26 November 2020 to 30 April 2021. On 26 June 2020, the Corporate Insolvency and Governance Act (CIG Act) came into force which introduced fundamental changes to the UK’s company and insolvency laws which not only provide temporary assistance to companies and their directors during the Coronavirus Disease 2019 (COVID-19) crisis, … the day to day running of the business of the debtor company remains with the directors but under the supervision of a monitor (an insolvency practitioner) and with the monitor’s consent required before the directors can undertake certain transactions; creditors and lenders will not be able to take enforcement action against the debtor company (including enforcement of security); and. 6. The New UK Restructuring Plan: an overview What is it? However, given the speed with which the Act has been passed, and the complexity of the legislation, there are undoubtedly areas of ambiguity and potential challenge. A free standing moratorium for distressed but viable companies introduced by the Act can be used to support a rescue of a company as a going concern (as opposed to the rescue of only the company’s business). The Corporate Insolvency and Governance Act 2020 makes the most significant changes to UK insolvency law in a generation. Our in-depth analysis of these new restrictions. 26.In Schedule 5 (enterprise management incentives), in paragraph 39 (company... 28.Income Tax (Trading and Other Income) Act 2005, 29.Insolvency (Northern Ireland) Order 2005 (S.I. The fraudulent trading and director disqualification regimes and general directors’ duties continue to apply. 24.Before section 416 (monetary limits (companies winding up)) insert— Monetary... 25.Omit section 417A (money sums: company moratorium). 10. 15. 39. The Whole July 2, 2020 It has now been more than three months since the UK Government imposed a nationwide lockdown. 18. 10)), Insolvency (Amendment) Act (Northern Ireland) 2016, Power to turn off provisions of Part 3 of this Schedule early etc. The Corporate Insolvency and Governance Act 2020 (the ‘Act’) permanently increases restructuring options for businesses experiencing financial difficulties, and includes temporary measures aimed at easing some of the most pressing consequences businesses may be experiencing as a result of the coronavirus (COVID-19) pandemic. 2005/1455 (N.I. 85. (1) Schedule B1 (administration) is amended as follows. © 2021 DLA Piper. 1. These Regulations extend the period during which Schedule 8 to the Corporate Insolvency and Governance Act 2020 (“the Act “) is to have effect. 6)), 35.Insolvency (Northern Ireland) Order 2005 (S.I. Income Tax (Earnings and Pensions) Act 2003. This allows the distressed airline industry to make use of those processes and in fact the first use of the restructuring plan process was by an airline, Virgin Atlantic Airways Limited. The Corporate Insolvency and Governance Act 2020 As noted above, the CIGA became law in the United Kingdom on 26 June 2020. 27. The Act is designed to provide businesses in financial difficulties with the flexibility and breathing space they need to continue trading and/or to explore a potential rescue or restructuring. (1) The following provisions of the Scottish Insolvency Rules apply,... 88.Contact details of a monitor or other office-holder. The Whole Act you have selected contains over 200 provisions and might take some time to download. The Schedules you have selected contains over 200 provisions and might take some time to download. (1) Section 245 of the 1986 Act (avoidance of certain... 19.Modification of Insolvency Rules and Rules of Court. 47.In regulation 21 (dissolution or voluntary arrangement), in paragraph (5A)—... 48.In Schedule 2 (bank administration), in paragraph 16(3)(ba)—, 49.The Charitable Incorporated Organisations (Insolvency and Dissolution) Regulations 2012, 50.Co-operative and Community Benefit Societies Act 2014. These amounts must continue to be paid or the moratorium will have to end. The Corporate Insolvency and Governance Act 2020 (“ Act ”) received royal assent on … 36. 14. No changes have been applied to the text. Dependent on the legislation item being viewed this may include: Click 'View More' or select 'More Resources' tab for additional information including: All content is available under the Open Government Licence v3.0 except where otherwise stated. As amounts due to lenders are among those which must be paid lenders have a large measure of control over the moratorium. It introduced a new restructuring plan procedure amongst its package of permanent measures. The Act marked the most significant insolvency reforms in … (1) A notice under section A17(4) of the Insolvency Act... 75.Notification by directors of insolvency proceedings etc, 77.Termination of moratorium under section A38(1)(d) of the Insolvency Act 1986, 78.Replacement of monitor or additional monitor: statement and consent to act, 79.Replacement of monitor or additional monitor: notification, 81.Challenge to directors’ actions: qualifying decision procedure, 82.Priority of moratorium debts etc in subsequent winding up, 83.Priority of moratorium debts etc in subsequent administration. With the exception of certain of the temporary relaxations to the moratorium, these measures have all now been further extended. (1) Schedule 7 (punishment of offences under the Order) is... 31.Limited Liability Partnerships Act 2000, 32.The Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001, 33.The Insolvency Practitioners Regulations (Northern Ireland) 2006, 34.Insolvency (Northern Ireland) Order 2002 (S.I. An initial 20 business day extension is available without consent, so many moratoria may last 40 business days. The restructuring plan can be used with or without the protection of the new moratorium. 2002/3152 (N.I. UK Corporate Insolvency and Governance Act 2020 Brings Significant Changes to Law The Corporate Insolvency and Governance Act 2020 received royal assent on 25 June 2020. Restriction on winding-up petitions: registered companies, Restriction on winding-up petitions: unregistered companies, Restriction on winding-up petitions: petitions made before commencement, Restriction on winding-up orders: registered companies, Restriction on winding-up orders: unregistered companies, Restriction on winding-up orders: orders made before commencement. These include amounts due for new supplies made during the moratorium, rent in respect of a period during the moratorium, wages and salary, and amounts due under financial contracts, including loan agreements. 20. 18. The following table summarises the more significant amendments made to the first draft of the bill (published on 20 May 2020) before it received Royal Assent and became law: The legislation was originally drafted such that financial creditors were able to accelerate their debts during the moratorium and obtain super priority for such debts in a subsequent administration or liquidation of the company, or protection from compromise for such debts in a CVA, scheme or restructuring plan, in each case occurring within 12 weeks of the end of the moratorium. 9. 4.Rules under Article 359 of the Insolvency (Northern Ireland) Order... 13.Content of documents relating to the obtaining or extending of a moratorium: general, 14.Authentication of documents relating to obtaining or extending moratorium: general, 15.Notice that directors wish to obtain a moratorium, 16.Proposed monitor’s statement and consent to act, 17.Timing of statements for obtaining moratorium, 18.Notice by monitor where moratorium comes into force, 19.Notice that directors wish to extend a moratorium, 20.Extension under Article 13CA or 13CB of the Insolvency (Northern Ireland) Order 1989: notices and statements, 21.Timing of statements for extension under Article 13CA or 13CB. The restructuring plan gives directors another tool when considering restructuring options. The initial period for the moratorium will be 20 business days but this is capable of being extended or terminated early. Our in-depth analysis of these temporary restrictions. 7. Omit section 417A (money sums: company moratorium). (1) The provisions of this Schedule, so far as relating... Protection of supplies of goods and services: Great Britain. Act you have selected contains over The Limited Liability Partnerships Regulations 2001, The Financial Services and Markets Act 2000 (Disclosure of Confidential Information) Regulations 2001, The Financial Collateral Arrangements (No.2) Regulations 2003, The Insolvency Practitioners Regulations 2005. It had a rapid passage through the UK … 16. (1) Schedule B1 (administration) is amended as follows. In Part 14 (change in company ownership), in section 724A... Third Parties (Rights against Insurers) Act 2010. (1) Section 100A (restructuring by company: proposed restructuring) is amended... (1) Section 101 (restructuring of company) is amended as follows.... Financial Services (Banking Reform) Act 2013. Omit section 1A (moratorium where directors propose voluntary arrangement). These were originally consulted on between 2016 and 2018 and were fast-tracked to deal with the COVID-19 … 23. Extensions to deadlines for filing accounts, and to other Companies House filing deadlines, are included both in the Act and in secondary legislation made under it. 37. 7. 10. 72. The Corporate Insolvency and Governance Act 2020 (the Act) entered into force on 26 June 2020. The Insolvency (Northern Ireland) Order 1989. (1) Part 24 (insolvency) is amended as follows. (1) Schedule B1 (administration) is amended as follows. It will be exciting to be part of the community developing market practice and testing the new provisions in negotiations and in the courts. Further extensions are available with the consent of creditors or the permission of the court. 26.In section 430 (provision introducing Schedule of punishments), after subsection... 27.In section 431 (summary proceedings), in subsection (1), for “Parts... 28.In section 432 (offences by bodies corporate), in subsection (4)—... 29.In section 434 (Crown application), after “Insolvency Act 1985” insert... 30.Omit Schedule A1 (moratorium where directors propose voluntary arrangement). (1) A notice under Article 13CH(2) or (3) of the... Where a moratorium comes to an end under Article 13CG... (1) A notice under Article 13CH(4) of the Insolvency (Northern... (1) This paragraph applies where a provision of this Part... Where a provision of this Part of this Schedule sets... Authentication of applications, notices and statements. 34. 33. The Act modifies existing insolvency legislation so that a petition presented in the relevant period will not prevent disposals of the debtor company’s property (which, for the purposes of the Act, are voided from the date of the winding-up order, rather than the date of the petition as is the usual position, unless the court orders otherwise). 32. The Corporate Insolvency and Governance Act 2020 was introduced on 26 June 2020. 35. 7.In relation to an application for a moratorium made under... 8.Relaxation of conditions for extending moratorium obtained during relevant period, 9.Monitoring of moratorium obtained during relevant period, 10.Termination of moratorium obtained during relevant period, PART 3 Temporary rules: England and Wales, 14.Content of documents relating to the obtaining or extending of a moratorium: general, 15.Authentication of documents relating to obtaining or extending moratorium: general, 16.Notice that directors wish to obtain a moratorium, 17.Proposed monitor’s statement and consent to act, 18.Timing of statements for obtaining moratorium, 19.Notice by monitor where moratorium comes into force, 20.Notice that directors wish to extend a moratorium, 21.Extension under section A10 or A11 of the Insolvency Act 1986: notices and statements, 22.Timing of statements for extension under section A10 or A11, 23.Obtaining creditor consent: qualifying decision procedure. 10)), 39.Insolvency (Amendment) Act (Northern Ireland) 2016, Moratoriums in Northern Ireland: temporary provision, 3.Power to turn off provisions of Part 3 of this Schedule early etc. It had a rapid passage through the UK parliamentary process, making its way from first publication on 20 May 2020 to Royal assent on 25 June 2020 in just over five weeks. The Corporate Insolvency and Governance Act 2020 has introduced a new standalone moratorium procedure for companies. Omit Schedule A1 (moratorium where directors propose voluntary arrangement). Tailor your perspective of our site by selecting your location and language below. 2.In each of the following places, for “Parts II to... 3.In Article 2(2), in the definition of “regulations”—. (1) No petition for the winding up of a registered... PART 2 Restriction on winding-up petitions and orders, 2.Restriction on winding-up petitions: registered companies, 3.Restriction on winding-up petitions: unregistered companies, 4.Restriction on winding-up petitions: petitions made before commencement, 5.Restriction on winding-up orders: registered companies, 6.Restriction on winding-up orders: unregistered companies, 7.Restriction on winding-up orders: orders made before commencement. 20. 23. Suppliers will also be banned from insisting on payment of sums falling due prior to the insolvency as a condition of continued supply. This article provides a brief overview of the key measures introduced by the Act (both … By Jennifer Payne (Linklaters Professor of Corporate Finance Law, University of Oxford) Jennifer Payne. (1) Schedule 3 (SAYE option schemes) is amended as follows.... (1) Schedule 4 (CSOP schemes) is amended as follows. 14. In Article 347 (“the relevant date” in relation to preferential... (1) Article 362 (monetary limits) is amended as follows. The aim is to afford companies some breathing space from creditor action to pursue a turnaround plan without adding significant costs. The measures introduced by … There are temporary exclusions for specified small suppliers which will remain in place until 30 March 2021 and permanent exclusions for certain financial institutions. (1) Schedule 10 (punishment of offences under the Act) is... 35.The Financial Markets and Insolvency (Settlement Finality) Regulations 1999, 36.Limited Liability Partnerships Act 2000. There were concerns that accelerated financial debts could be given this super priority status, but amendments in the House of Lords have sought to deal with that issue. restrictions on termination of contracts for the supply of goods and services. Omit Article 14A (moratorium where directors propose voluntary arrangement). 15. (1) In their application for the purposes of a decision... 24.Rule 4.061 has effect as if for paragraphs (1) to... 25.Rule 4.062 has effect as if for paragraphs (2) to... 26.Rule 4.065 has effect as if, in paragraph (2), for... 27.Rule 4.068 has effect as if for it there were... 28.Rule 4.070 has effect as if for it (and its... 29.Rule 4.073 has effect as if— (a) after paragraph (3)... 30.Rule 4.077 has effect as if— (a) in paragraph (1)... 31.Content of application to the High Court for extension of moratorium, 32.Timing of statements accompanying application to High Court for extension of moratorium, 33.Notices about change in end of moratorium. That description expressly excludes amounts under financial contracts, which became due in the period from the date of the monitor’s statement that a rescue would be likely (so slightly before the moratorium comes into force) to the end of the moratorium, because of an acceleration or early termination clause or right. On 20 May 2020, the UK government introduced the Corporate Insolvency and Governance Bill (the Bill) to Parliament.The Bill went through a fast-track approval process in Parliament, received Royal Assent on 25 June 2020 and entered into force on 26 June 2020 as the Corporate Insolvency and Governance Act 2020 (the Act).The Act introduces a number of temporary and … (1) Section 101 (restructuring of company) is amended as follows.... 49.Financial Services (Banking Reform) Act 2013, PART 1 Prohibition of petitions on basis of statutory demands. 14. (1) A notice under Article 13CH(4) of the Insolvency (Northern... 37.Notification by directors of insolvency proceedings etc, 39.Termination of moratorium under Article 13ED(1)(d) of the Insolvency (Northern Ireland) Order 1989, 40.Replacement of monitor or additional monitor: statement and consent to act, 41.Replacement of monitor or additional monitor: notification, 43.Challenge to directors’ actions: meeting, 44.Priority of moratorium debts etc in subsequent winding up, 45.Priority of moratorium debts etc in subsequent administration. Relaxation of conditions for obtaining moratorium etc. 21. Financial contracts are excluded which means that lenders will continue to be able to terminate, and exercise other rights, upon a borrower’s insolvency. a restructuring plan process (largely modelled on schemes of arrangement but with the addition of a cross-class cram-down); and. The relevant provisions of the Act for Landlords are considered below. 2014/229), 55.The International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015, Moratoriums in Great Britain: temporary provision, PART 1 “Relevant period” and powers to turn off temporary provision, 2.Power to turn off particular provisions of Part 2 of this Schedule early, 3.Power to turn off provisions of Parts 3 and 4 of this Schedule early etc. We summarise below the main provisions of the Act. Debate on the legislation in the House of Lords extended to points which have been discussed in the industry for some time but were not included in the Bill for example insolvency practitioner regulation; the need for corporate governance reform; protection for small business from late payment; and criticism of the proposed elevation of certain tax debts to preferential status from December 2020. Dependent on the legislation item being viewed this may include: Use this menu to access essential accompanying documents and information for this legislation item. 5. An Act to consolidate the enactments relating to company insolvency and winding up (including the winding up of companies that are not insolvent, and of unregistered companies); enactments relating to the insolvency and bankruptcy of individuals; and other enactments bearing on those two subject matters, including the functions and qualification of insolvency practitioners, the public administration of insolvency… 8. 24.Rule 15.11 of the England and Wales Insolvency Rules (notice... 25.Rule 15.28 of the England and Wales Insolvency Rules (creditors’... 26.Rule 15.31 of the England and Wales Insolvency Rules (calculation... 27.Rule 15.32 of the England and Wales Insolvency Rules (calculation... 28.Rule 15.34 of the England and Wales Insolvency Rules (requisite... 29.Content of application to the court for extension of moratorium, 30.Timing of statements accompanying application to court for extension of moratorium, 31.Notices about change in end of moratorium. 64.Rule 5.11 of the Scottish Insolvency Rules (notice of decision... 65.Rule 5.26 of the Scottish Insolvency Rules (creditors’ voting rights)... 66.Rule 5.28 of the Scottish Insolvency Rules (calculation of voting... 67.Rule 5.29 of the Scottish Insolvency Rules (calculation of voting... 68.Rule 5.31 of the Scottish Insolvency Rules (requisite majorities) has... 69.Content of application to the court for extension of moratorium, 70.Timing of statements accompanying application to court for extension of moratorium, 71.Notices about change in end of moratorium. Valuation will be key in the new process both in assessing the comparison for creditors being crammed down as part of a plan and also when assessing which creditors are out of the money and can be excluded from the voting process. The Financial Markets and Insolvency (Settlement Finality) Regulations 1999. 1 The moratorium is part of a package of significant legislative reforms contained in the Act, intended to enhance the UK’s restructuring rescue culture. The Corporate Insolvency and Governance Act 2020 makes the most significant changes to UK insolvency law in a generation. The measures on meetings and filings apply to the whole of the United Kingdom. 2002/3152 (N.I. Financial creditors therefore still have the power to bring an early end to the moratorium by accelerating their debts. Contact details of a monitor or other office-holder. (1) Section 414 (fees orders) is amended as follows. Whilst certain businesses are beginning to resume operations, many still face an uncertain future. The Corporate Insolvency and Governance Act 2020 (Act), which came into force on 26 June 2020, brings into effect previously announced insolvency reforms. The Investment Bank Special Administration Regulations 2011. 2005/1455 (N.I. The Act is designed "to make provision about companies and other entities in financial difficulty; and to make temporary changes to the law relating to the governance and regulation of companies and other entities." There are outstanding changes not yet made by the legislation.gov.uk editorial team to Corporate Insolvency and Governance Act 2020. may also experience some issues with your browser, such as an alert box that a script is taking a 200 provisions and might take some time to download. It had a rapid passage through the UK parliamentary process, making its way from first publication on 20 May 2020 to Royal assent on 25 June 2020 in just over five weeks. (1) Section 118 (power to apply provisions about company arrangements... 53.In section 147 (regulations and orders), in subsection (3), for... 54.The Co-operative and Community Benefit Societies and Credit Unions (Arrangements, Reconstructions and Administration) Order 2014 (S.I. The PPF is also given standing to challenge the monitor’s or director’s conduct during a moratorium where the trustees or managers of the scheme are creditors and would have standing to make such a challenge. 43. 25. Moratoriums in Great Britain: further amendments and transition, Moratoriums in Great Britain: temporary modifications, Moratoriums in Northern Ireland: further amendments and transition, Moratoriums in Northern Ireland: temporary modifications, Administration in Great Britain: sales to connected persons, Administration in Northern Ireland: sales to connected persons, Suspension of liability for wrongful trading: Great Britain, Suspension of liability for wrongful trading: Northern Ireland, Temporary exclusion for small suppliers: Great Britain, Protection of supplies of electricity, gas, water, etc: Northern Ireland, Further protection of essential supplies: Northern Ireland, Temporary exclusion for small suppliers: Northern Ireland, Regulations to amend legislation: Great Britain, Regulations to amend legislation: Northern Ireland, Procedure for regulations made by the Department, Procedure for regulations made by the Secretary of State, Temporary extension of period for public company to file accounts, Temporary power to extend periods for providing information to registrar, Power to change duration of temporary provisions: Great Britain, Power to change duration of temporary provisions: Northern Ireland, Modified procedure for regulations of the Secretary of State, Modified procedure for regulations of the Welsh Ministers, Modified procedure for regulations of the Scottish Ministers, Modified procedure for regulations of Northern Ireland departments. (1) Schedule B1 (administration) is amended as follows. 4. 13.In section 263CA (stock lending: insolvency etc of borrower), in... 14.In Schedule 5AA (meaning of “scheme of reconstruction” for purposes... 17.Financial Services and Markets Act 2000. 2014/229), The International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015, Power to turn off particular provisions of Part 2 of this Schedule early, Power to turn off provisions of Parts 3 and 4 of this Schedule early etc. At all stages, only government amendments were accepted, though many others were proposed. On 25 June 2020, the Corporate Insolvency and Governance Act 2020 (the Act) received royal assent. 29 June 2020 The Act is the largest change to the UK’s corporate insolvency regime in more than 20 years. An uncertain future largest change to the text, can be found in content. For more information see the EUR-Lex Public statement on re-use legislation.gov.uk editorial team Corporate... 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