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ARTICLE · 28 NOVEMBER 2024

The New Insolvency Rules

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The Corporate Insolvency and Governance Act 2020 provides businesses with breathing room during financial struggles, preventing suppliers from terminating contracts during insolvency, with exceptions for small suppliers and specific hardships.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Barton Legal
Barton Legal
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What Changes Were Made to the Insolvency Legislation?

The Corporate Insolvency and Governance Act 2020 ("CIGA") was brought in to relieve the burden on businesses during and after the Covid-19 pandemic. It amended the Insolvency Act 1986, with the aim of allowing a company which is facing potential financial difficulties and considering restructuring, to do so, without having its contracts terminated in the process.

This essentially allows the company some breathing room to restructure and consider their options, similar to a stay in proceedings.

The insolvent or soon to be insolvent company applies to Court for this and a licensed insolvency practitioner needs to consent, monitor and confirm if they believe the company can be rescued as a going concern following the moratorium period.

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