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As readers of our series on the Corporate Insolvency and Governance Act 2020 (CIGA 2020) will be well aware, CIGA 2020 was passed in June and included a number of new measures intended to provide protection to business affected by the COVID-19 pandemic. The various measures have been addressed in detail in our series of articles (which can be accessed here).

On 24 September 2020, the UK Government announced that a number of the measures, which were due to expire on 30 September 2020, will now be extended:

  • increased flexibility in relation to the holding of AGMs will be extended until 30 December 2020;
  • statutory demands to businesses and company winding up petitions will continue to be restricted until 31 December 2020;
  • Certain contract termination clauses which would otherwise benefit suppliers will remain prohibited, but smaller suppliers are still exempted from the prohibition until 30 March 2021;
  • Relaxed entry requirements to the new moratorium procedure under CIGA 2020 will be extended to 30 March 2021. Temporary moratorium rules will also be extended to 30 March 2021.

Notably, there is no mention of an extension in respect of the relaxations to the Director’s Wrongful Trading provisions. Consequently that relaxation measure should expire on 30 September 2020 as planned.

The extension of the measures comes as no particular surprise given the UK Government’s broader stated policy goal of protecting businesses and jobs and avoiding the anticipated wave of insolvencies/redundancies following the end of the furlough scheme. The omission of an extension to the Director’s Wrongful Trading relaxations has not yet been commented on by the UK Government (at the time of writing) but certainly the rationale and efficacy of that particular relaxation was the subject of criticism from the professional insolvency community. It may be that the Government has now listened to those voices casting doubt over whether that particular measure would be effective or even sensible.

We would encourage anyone affected by the measures to revisit our prior articles to understand the detailed provisions and read our commentary. Our previous articles can be accessed here. Alternatively, feel free to contact a member of the Firm’s Insolvency Team.

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