The Corporate Insolvency and Governance Bill outlines that struggling companies will be given extra time to consider rescue plans presented to them. As part of the changes, companies will have 20 business days to consider a rescue plan, which can be extended to 40 days at the discretion of creditors or the Court.
The Bill stipulates that a company will remain under the control of directors; however, the insolvency process must be overseen by a licensed insolvency practitioner.
Additionally, restructuring plans have been introduced in the Bill, which will bind creditors and allow the insolvency process to adjust as the COVID-19 pandemic changes.
Colin Haig, President of insolvency trade body R3 said:
‘This Bill represents the biggest change to the UK’s insolvency and restructuring framework for almost 20 years.
‘The measures contained in this Bill will support the profession’s efforts to help businesses navigate the enormous economic damage caused by the pandemic.’
The insolvency law measures in the Bill are “reserved” in relation to Wales, in some respects devolved in Scotland and are fully transferred to Northern Ireland.
The measures on meetings and filings apply to the whole of the United Kingdom. Company Law is a reserved matter in England and Wales and in Scotland.
As some of the measures, by virtue of the law they interact with, touch on devolved competence in Scotland, a Legislative Consent Motion is being sought.
For more information contact Steven Wright in our Business Recovery team.
