Provisions to protect companies from insolvency and to provide flexibility around meetings extended

Many organisations will have welcomed the news that the department for Business, Energy and Industrial Strategy (BEIS) recently confirmed that measures put in place to protect companies (including charitable companies) from insolvency and allow flexibility around holding meetings virtually have been extended.  A raft of changes introduced in the Corporate Insolvency and Governance Act and were due to expire on 30 September 2020.

Companies with obligations to hold AGMs will continue to have the flexibility to hold these meetings virtually until 30th December.  Flexibility to postpone AGMs has not been extended.

The following measures are extended until 31 December 2020:
  • the prohibition on presenting winding-up petitions based on statutory demands
  • the prohibition on presenting winding-up petitions or making winding-up orders based on any other definition of the debtor's inability to pay its debts, unless coronavirus can be discounted as a reason for that inability.
The following measures are extended until 30 March 2021:
  • termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. However, small suppliers will remain exempted from the obligation to supply until 30 March 2021 so that they can to protect their business if necessary
  • the modifications to the new moratorium procedure, which relax the entry requirements to it. A company may enter into a moratorium if they have been subject to an insolvency procedure in the previous 12 months. Measures will also ease access for companies subject to a winding up petition. The temporary moratorium rules will also be extended to 30 March 2021.

The law and practice referred to in this article or webinar has been paraphrased or summarised. It might not be up-to-date with changes in the law and we do not guarantee the accuracy of any information provided at the time of reading. It should not be construed or relied upon as legal advice in relation to a specific set of circumstances.

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