HomeFWJ TakeawayCompany rescueBusiness recovery and rescueCorporate Insolvency and Governance Bill to bring major insolvency reforms

On Wednesday (20 May 2020) the government announced the Corporate Insolvency and Governance Bill being put before Parliament. It will have its second reading in the House of Commons on 3 June 2020.

Curiously, the Bill refers both to companies facing insolvency proceedings (including winding-up petitions) and those which are live trading companies, albeit subject to the restrictions imposed by the COVID-19 lockdown, and not facing insolvency proceedings.

There is an additional third category, overseas companies, provided that they are not currently subject to a winding-up petition (presumably as an unregistered UK company).

The main parts introduced by the Bill include:

  • Relaxing the rules requiring documents to be filed at Companies House
  • Providing creditor protection to companies to prevent the onset of insolvency
  • Introducing new tools to enable corporate restructuring. The Bill also seeks to modify the insolvency legislation to accommodate these changes.Included within these rules is a positive requirement on companies to seek extensions for deadlines to file their financial accounts – there is no automatic extension.Companies facing winding-up petitions can also seek to suspend any winding-up proceedings faced in certain circumstances, so long as certain “Relevant Documents” are provided by that company. Again, there is a positive obligation on the company to act.

Subject to any amendments, this act may be passed in early June (or later) and will have a resounding impact on the winding-up of companies, corporate governance and decision making in these very unusual times.

If you require any guidance on the Corporate Insolvency and Governance Bill, please do not hesitate to get in touch.

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