The Corporate Insolvency & Governance Act 2020 – Insolvency / Bankruptcy / Restructuring

The Corporate Insolvency & Governance Act 2020 was enacted very quickly for the protection of viable businesses during the pandemic. It covers a number of areas, including, some changes have been made under Article 10 from October 1, 2021 and are expected to remain in place until March 31, 2022 and beyond:

• The directors’ liability in the event of non-solvency is extended from March 1, 2020 to September 30, 2020 and from November 26, 2020 to June 30, 2021

• A creditor can again rely on an unpaid legal claim as proof of the inability to pay debts as they fall due.

• A creditor should not apply for liquidation for an excluded debt which is defined as a debt owed by a tenant under a commercial lease that is unpaid due to the financial effects of Covid 19.
• A creditor should not apply for liquidation for a debt less than £ 10,000.00, it must be due and a claim liquidated.
• An annex 10 notice must be given to the debtor (head office or main establishment) indicating: –
• (a) the creditor solicits the debtors’ proposals for the payment of the debt; and
• (b) if the debtor has not made a proposal to the satisfaction of the obligee within 21 days, the obligee intends to submit a request for liquidation.
• A creditor can ask the court to order that it does not need to give a Schedule 10 notice or give the debtor 21 days to make a satisfactory proposal.

However, the creditor’s request for liquidation must include the following two declarations:

That the requirements of paragraph 1 of Annex 10 have been met.

Either no proposal for payment of the debt has been made, or a summary of the reasons why the proposals made have not been to the satisfaction of the creditor.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.