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.
