Extension of Temporary Insolvency Measures

The Corporate Insolvency and Governance Act 2020 (“CIGA”) introduced a number of temporary measures designed to help UK companies and other entities during  the turbulent times caused by the coronavirus pandemic. These temporary measures have been extended a number of times over the past 12 months and, on 25 March 2021, the government announced further extensions to certain of these measures. The current measures, and their expiry dates, are set out below:

No extension to corporate filings

The automatic extension for corporate filings due at Companies House will expire on 5 April 2021; confirmation statements, accounts, event-driven filings and security will need to be filed within the usual time periods. Eligible companies can apply for a 3 month extension if required, citing coronavirus as the reason, and, in these circumstances, should be granted an extension.

References:
https://www.gov.uk/government/news/government-extends-business-supportmeasures
https://www.legislation.gov.uk/uksi/2021/375/contents/made
https://www.gov.uk/government/news/automatic-filing-extensions-granted-bythe-corporate-insolvency-and-governance-act-due-to-come-to-an-end
https://www.gov.uk/government/news/further-support-for-commercial-andresidential-tenants

The measures - more detail

Suspension of liability for wrongful trading

In determining for the purposes of section 214 and 246ZB of the Insolvency Act 1986 (liability of a director for wrongful trading), the contribution (if any) to a company's assets that is deemed proper for the person to make, the court is to assume that the person is not responsible for any worsening of the financial position of the company or its creditors that occurs during the relevant period to 30 June 2021.

Moratorium on winding up petitions

A creditor cannot present a winding up petition against a company based on a statutory demand that was served between 1 March 2020 and 30 June 2021, nor present a winding up petition between 1 March 2020 and 30 June 2021 based on the company’s inability to pay its debts, unless the creditor has reasonable grounds for believing that coronavirus has not had a financial effect of the company, or the debt or circumstances would have arisen even if coronavirus had not had a financial effect on the company.

Access to the Part A1 moratorium

For the purposes of obtaining or extending a moratorium pursuant to Part A1 of the Insolvency Act 1986, a moratorium may be obtained if it is likely that the moratorium would result in the rescue of the company as a going concern or, until 30 June 2021, would do so if it were not for any worsening of the financial position of the company for reasons relating to coronavirus.

Small businesses

Where a company becomes subject to an insolvency procedure, a supplier of goods and services may not terminate the contract or supply by reason of the relevant insolvency procedure. This provision does not apply to a small supplier during the period to 30 June 2021.

Moratorium on forfeiture

The right of re-entry or forfeiture, under a relevant business tenancy, for non payment of rent may not be enforced byaction or otherwise, during the relevant period to 30 June 2021. Further, the restriction on landlords using Commercial Rent Arrears Recovery (CRAR) to recover unpaid rent will also extend to the end of June, in line with the moratorium’s expiry date, giving businesses sufficient breathing space to pay rent owed.

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