As we touched on in our previous blog post on this legislation, one of the Government’s earliest responses to the coronavirus crisis in 2020 was to bring forth what became the Corporate Insolvency and Governance Act 2020, or CIGA.
Now, various temporary measures contained within the Act have been extended until 30 June 2021, including:
- The continued suspension of the rules around wrongful trading liability. This measure dictates that a director will not be deemed responsible for any worsening of a company’s financial position between 1 March 2020 and 30 September 2020, and between 26 November 2020 and 30 June 2021
- The continuation of the blanket restriction – as has been in place since 27 April 2020 – on the presentation of winding-up petitions based on statutory demands served on or after 1 March 2020
- Continued restrictions on the presentation of winding-up petitions and winding-up orders
- Small suppliers still being excluded from the prohibition on terminating a supply contract while a customer is insolvent
- Also continuing, until 30 September 2021, will be temporary modifications and relaxation to the requirements for the new moratorium procedure outlined in CIGA 2020, schedule 4
Several issues of concern remain for struggling businesses
The protracted wait for the Government to extend the insolvency measures caused many observers to wonder whether they would be extended at all. However, the news that these Regulations are, indeed, continuing is not a complete shock, given how they mirror the arrangements still in place for lease forfeitures and repossession restrictions, which have been extended until 30 June 2021.
The disruption caused by the COVID-19 situation has resulted in significant trading difficulties for many businesses that would otherwise be economically stable. This, in turn, has raised fear of an elevated insolvency risk for some of these firms.
Much speculation will now centre on whether the Regulations are likely to see any further extensions, not least given that they are presently set to cease only shortly after the lifting of all general lockdown restrictions in England. This raises the question of whether businesses will have enough time after the Regulations expire to recover and fend off any creditors that may intend to approach them soon after 30 June 2021.
Whatever corporate governance issues apply to your business, we’re here for you
Every organisation is different, of course, and there is a wide range of concerns that your own business may have in relation to corporate governance, risk and compliance in the weeks and months ahead. This is precisely why the advice, guidance and support of experts in these areas – such as those of London Registrars – could prove so crucial.
With solutions of ours including – but not limited to – company secretarial practice for PLCs encompassing directors’ service addresses, maintenance of the register of shareholders, the preparation and submission of the annual Confirmation Statement, and so much more, our team is available to provide the support your organisation might need.
Call, email or fax our team today, and we would be happy to advise further on your company’s particular circumstances and requirements as the UK emerges from the COVID-19 crisis.
4 May 2021