The Corporate Insolvency and Governance Act 2020 came into effect on 26 June 2020 to protect businesses during the corona virus pandemic. Some of the ‘Relevant Periods’ of the temporary measures, which were due to expire on 30 September 2020, have been extended by The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 (“the Regulations”) hoping to ease some pressures on businesses. The amendments to the Relevant Periods are:
- Section 15(2)(b) is extended to 30 March 2020: this allows for small suppliers to be exempted from the ban of termination clauses (or ‘ipso facto’ clauses), which are clauses to allow a party to terminate supply while a company is going through a rescue process.
- Paragraph 1(b) of Schedule 4 is extended to 30 March 2020: this allows the modifications to the moratorium procedure to be extended.
- Paragraphs 1(3)(b) and 21(1)(b) of Schedule 10 are extended to 31 December 2020: this provides that the service of statutory demands and winding up petitions are restricted to protect companies from aggressive creditor enforcement action as a result of corona related debts (unless the creditor can prove that the corona virus did not have a financial effect on the debtor company).
- Paragraph 2(1)(b) of Schedule 14 is extended to 30 December 2020: this allows companies and other qualifying bodies with obligations to hold AGMs to continue to have the flexibility to hold these meetings virtually.
We must note that the Regulations have not extended the deadline for fillings at Companies House, nor the Relevant Period for personal liability for wrongful trading. It is unclear whether the extensions will help those companies facing statutory demands and winding up petitions avoid insolvency, or whether the extensions are just delaying the inevitable.
Lucy Penfold, Litigation Senior Associate: firstname.lastname@example.org