In standard building contracts most commonly used in the UK, a party is entitled to terminate the contract if the other party is insolvent (Clause 91 of NEC3 and NEC4 and Clause 8.5 and 8.10 of JCT/SBCC).
The Corporate Insolvency and Governance Act 2020 provides measures for businesses that are designed to provide temporary reliefs during the COVID-19 pandemic, as well as permanent measures for companies in financial difficulty.
On 30 July 2020, the UK Insolvency Service published its quarterly insolvency statistics. Notably:
On 17 June 2020, the much anticipated Judgment in the Supreme Court case of Bresco Electrical Services Ltd v Michael J Lonsdale (Electrical) Ltd [2020] was handed down.
This article analyses the key outcomes of the decision, however, in order to contextualise the Judgment we first provide an overview of the relevant background.
The Technology & Construction Court
Retrospective changes introduced by the Corporate Insolvency and Governance Act 2020 to the wrongful trading regime to mitigate the impact of the Coronavirus (COVID-19) pandemic.
On 26 June 2020 the Corporate Insolvency and Governance Act 2020 (“the 2020 Act”) finally entered into force. Since then Simon Newman and Christopher Pask of 1 Chancery Lane’s Property, Chancery and Commercial team have been offering their views on its provisions and their impact over a series of updates.
On 25 June 2020, the new Corporate Insolvency and Governance Act (the "Act") received Royal Assent. We anticipate that the changes introduced by the Act will have a significant impact on the future direction of the UK restructuring market.
New restrictions contained in the Corporate Governance & Insolvency Act 2020 now in force severely impact the steps creditors can take to get payment of an undisputed debt owed by a company.
Creditors cannot now use statutory demands to threaten that a company will be wound up if it does not pay what is owed. This is because any statutory demand made between 1 March 2020 and 30 September 2020 will be void.
The Corporate Insolvency and Governance Act 2020 makes the most significant changes to UK insolvency law in a generation. The Act introduces three permanent measures: a new free standing moratorium, a new restructuring plan process (largely modelled on schemes of arrangement but with the addition of a cross-class cram-down), and restrictions on termination of contracts for the supply of goods and services. The moratorium and the restructuring plan are of particular significance to secured lenders, and this note addresses some of the most frequently asked questions by the ABL community.
In light of the fast moving pace of developments on COVID-19, and the varying degrees to which information is available to our clients in the projects & construction sector in relation to its impact on their operations, we will be circulating a regular update that addresses the following:
Summary
The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June 2020 after a fast-tracked consultation process. Intended to provide a lifeline to struggling businesses during the COVID-19 pandemic and beyond, it consists of temporary measures, meant to alleviate the short-term disruption caused by the pandemic and permanent measures, which are more broadly designed to assist companies in times of difficulty.
publication of The Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020. If approved by Parliament the scheme will come into force on 4 May 2021.