· The Corporate Insolvency and Governance Bill is said to be the ‘biggest change to the UK’s insolvency and restructuring framework for almost twenty years.
· In line with this, the Bill rapidly passed through the House of Commons in one day on 3 June, and was debated in the House of Lords on 9 June.
· The Committee stage is scheduled for the 16th June.
· The Bill seeks to make provisions specifically for companies and other entities in financial difficulty.
· The Bill aims to amend the UK’s corporate insolvency framework and give struggling businesses the options to restructure themselves, to continue to trade and to find new finance.
· It will allow businesses in difficulty to propose a new restructuring plan that will detail a suitable rescue option.
· The Bill will also include a business moratarium. This will provide businesses with 20 business days to consider a rescue plan. This period will be extendable, by directors, for another 20 business days, or up to a year, with creditor consent.
· During this period, the business will be in the control of its directors and no legal action may be taken against a business without leave of the court.
· The moratorium process must be overseen by a licenced insolvency practitioner who will act as a monitor.
· Additionally, the Bill introduces a change to termination clauses in contracts for suppliers of essential services to the business. This change will mean that where the business has entered insolvency, a restructuring procedure, or has obtained a moratorium, the business suppliers cannot rely on contractual terms to stop supplying.
· The Bill now determines that once the insolvency process has started the customer is required to pay for any supplies, however, it is not required to pay any amounts that are due for past supplies while its rescue plan is being arranged.
· The measure will also safeguard suppliers to ensure they can be relieved of any requirement to supply to the struggling businesses.
If there is any information you wish to discuss further, please contact one of our partners.
This article is prepared with the intention of providing general information on the changes in law. Philip Ross Solicitors accept no responsibility for errors it may contain and the coverage of the topic is not comprehensive. You are advised to speak directly to the writer or another partner within this firm with any specific enquiries on the topic addressed.