The government has introduced the Corporate Governance and Insolvency Bill in parliament with the aim of supporting economic recovery for businesses.
It will put in place a series of measures to amend insolvency and company law to support business to address the challenges resulting from the impact of coronavirus.
The Bill consists of 6 insolvency measures and 2 corporate governance measures and will provide vital support to businesses to help them through this period of instability.
Commenting, business secretary Alok Sharma said: “This is a particularly challenging time for businesses right across the UK, and we are doing all we can to support them through this period.
“Our proposals have been widely welcomed by business groups. The Bill will help companies that were trading successfully before the COVID-19 emergency to protect jobs and put them in the best possible position to bounce back.”
The corporate governance measures will introduce temporary easements and flexibility to businesses where they are coping with reduced resources and restrictions.
This Bill will do this through:
- introducing a new moratorium to give companies breathing space from their creditors while they seek a rescue
- prohibit termination clauses that engage on insolvency, preventing suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process
- introducing a new restructuring plan that will bind creditors to it
- enabling the insolvency regime to flex to meet the demands of the emergency
- temporarily removing the threat of personal liability for wrongful trading from directors who try to keep their companies afloat through the emergency
- temporarily prohibiting creditors from filing statutory demands and winding up petitions for coronavirus related debts
- temporarily easing burdens on businesses by enabling them to hold closed Annual General Meetings (AGMs), conduct business and communicate with members electronically, and by extending filing deadlines
- allowing for the temporary measures to be retrospective so as to be as effective as possible