From 26 June 2020, there have been important updates on the Corporate Insolvency and Governance Act that may affect your business. 

Most companies have faced financial difficulties during COVID-19 and the government have taken this into consideration with the hope changes to Insolvency will allow companies to continue to trade despite the financial pressures of the pandemic.  

The Corporate Insolvency and Government Act 2020 has introduced a moratorium process for companies that are incorporated under the Companies Act 2006 (or any unregistered company that may be wound up under the Insolvency Act 1986) whereby the director(s) of that company can show that the company is unable or is unlikely to pay its debts. 

This process permits the director(s) of the company to review the company’s affairs alongside a ‘Monitor’. A Monitor is a licensed insolvency practitioner that understands their role and responsibilities in this regard and will oversee the company’s affairs to help formulate a turnaround strategy for the company – but only if the Monitor believes this is possible. 

Please note however that the company must continue to pay any debts under the moratorium and failure to pay these will result in the termination of the moratorium.  

Within the moratorium process, the Act has provided a 20-working day extension period from any creditor action to offer businesses some protection and allow some “breathing space” for companies to get their ducks in a row and to seek professional legal advice.  

Should you have any further questions or require any advice regarding your company’s solvency, whether before or during any formal process, then please do not hesitate to contact John Bailes at jb@bailoransolicitors.com or 0113 266 0735.