What are the changes to UK insolvency law?

In June 2021, we reported on The Corporate Insolvency and Governance Act 2020 which came into force bringing about the most significant changes to the UK’s insolvency procedures in nearly 20 years.

As a reminder, The Act contained both short-term measures to relieve the burden on businesses of the Covid-19 pandemic and longer-term permanent reforms to the insolvency regime.

Short term measures of the Act include:

• Restrictions on using winding-up processes (now in place until 31 March 2021). A creditor is unable to present a winding up petition, unless there are reasonable grounds to believe that COVID-19 has not had a financial effect on the debtor company, or that the debtor company was unable to pay its debts regardless of COVID-19’s financial effect
• Temporary changes to wrongful trading rules. The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations have suspended wrongful trading liabilities for the period between 26 November 2020 and 30 April 2021
• Relaxation of meetings and filing requirements to provide companies with greater flexibility

The permanent measures have been set out in our guide here. It contains a case study of a business who provides an essential service and we outline the steps they took for one of the clauses.

The changes in the act has potential for huge changes to business. SMB  can help to review and if required update current arrangements to reflect the change in the law. Please contact Partner Simon Halberstam at simon.halberstam@smab.co.uk.