On 24 March 2021 regulations were laid before parliament to further extend the protections introduced under the Corporate Insolvency and Governance Act 2020 (CIGA). CIGA originally introduced a number of measures designed to protect companies and directors who were struggling during the pandemic. These measures had originally been implemented to expire at the end of September 2020 but had been subject to two further extensions previously, and have now been extended further.
The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021 have extended the key measures in different ways. In summary they are:
- The suspension of liability for wrongful trading is extended until 30 June 2021 for directors who continue to trade a company through the pandemic with uncertainty as to whether their company may be able to avoid insolvency in the future.
- The prohibition on termination clauses is also extended until 30 June 2021, although small suppliers will remain exempted from the obligation to supply.
- The relaxation of entry requirements into the new moratorium procedure will also be extended, in this instance until 30 September 2021.
- Statutory demands and winding-up petitions will continue to be restricted until 30 June 2021.
It remains to be seen whether there will be a further extension of these provisions. Much is likely to depend upon the success of the vaccination programme and the opening up of the economy. However, it is difficult to envisage the government allowing a cliff edge ending to these protections when it has spent so long over the past year seeking to protect embattled businesses.
We published a series of articles on the impact of these changes when they were first introduced. For a better understanding of the effect of the different CIGA protections, these articles can be found here:
- Corporate Insolvency and Governance Act 2020, The ‘new normal’ for Statutory Demands and Winding Up Petitions under the Corporate Insolvency and Governance Act 2020
- Obtaining a Winding Up Order when the Corporate Insolvency and Governance Act 2020 applies retrospectively
- Corporate Insolvency and Governance Act 2020, UK insolvency landscape permanently changed by the Corporate Insolvency and Governance Act 2020 (“the 2020 Act”)
- Corporate Insolvency and Governance Act 2020, Ipso facto provision introduced to UK insolvency landscape by the Corporate Insolvency and Governance Act 2020 (“the 2020 Act”)
If you or your clients are facing issues where the 2020 Act is at play and require any assistance with understanding how these provisions may impact upon your matter, members of 1 Chancery Lane are on hand to assist. Please email the clerks or complete our online form.