In 2020, after the Covid-19 Pandemic, the Government introduced the Corporate Insolvency and Governance Act 2020 (‘The Act’) to try and combat the uncertainty around trading conditions and provide more options to companies facing difficulties.
Background
The Act was designed to permanently increases restructuring options for business as well as temporary measures aimed at easing some of the most significant consequences of Covid-19. The temporary measures have now been suspended as it has been 3 years since the Pandemic.
The permanent measures include a new ‘Company Moratorium’ which provides a statutory breathing space where directors retain control of companies to allow them to consider restructuring options without any creditor pressure.
Impact
Whilst The Act was long awaited, 3 years after its introduction has seen the uptake of the options introduced by The Act modest, at best. The Interim Report from June 2022 suggests that there are still areas of improvement regarding restructuring options for companies facing financial difficulties.
It is however a step in the right direction, the core insolvency legislation is over 20 years old and the introduction of The Act, suggests a willingness of the Government and the Insolvency Service to develop insolvency legislation in line with the rapid and ever developing landscape.
Conclusion
It has generally been seen that The Act has been a positive introduction in Insolvency Law and Insolvency Practitioners have responded well to the increased options that it provides them and the companies they are advising. There does however remain some ambiguity over the effectiveness of some of the processes introduced by the Act and its overall impact remains inconclusive.
For further information on this topic or on any other legal area, please contact John Szepietowski or Kay Stewart at Audley Chaucer Solicitors on 01372 303444 or email admin@audleychaucer.com or visit our LinkedIn page at https://www.linkedin.com/company/audley-chaucer-solicitors