On 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.

As part of these measures, a new provision has been inserted into existing legislation which will curtail the ability of suppliers to terminate supply contracts when a customer becomes insolvent (the so called `ipso facto regime').

The new moratorium regime

What are the potential implications of the new moratorium regime set out in the Corporate Insolvency and Governance Act 2020 (the “Act”) for aircraft lenders, lessors and airlines? In the first of a series of three articles, we consider this new law.

On 25 June 2020, the Corporate Insolvency and Governance Act 2020 (the Act) received Royal Assent, and the majority of its provisions are now in force. The Act has introduced a number of permanent reforms and temporary measures, which together represent the most significant change to English insolvency law in nearly 20 years.

Permanent Reforms

The permanent reforms include:

An unfortunate but inevitable consequence of the economic downturn induced by COVID-19 is that an increasing number of construction companies will enter into insolvency. In Bresco Electrical Services Ltd (in liquidation) v. Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, the Supreme Court has provided some respite to contractors in liquidation by finally confirming their unfettered right to refer construction disputes for resolution by adjudication.

The Corporate Insolvency and Governance Act 2020 introduces a temporary, retrospective suspension of the directors' personal financial liability for wrongful trading from 1 March 2020 until 30 September 2020. This is not a blanket defence to a breach of duty by directors, since the directors' general duties to act in the best interests of the company (or, on insolvency, its creditors),will continue to apply.

On 26 June the long-awaited Corporate Insolvency and Governance Act 2020 came into force and introduced emergency measures to provide protection to directors of companies which continue to trade notwithstanding the threat of insolvency, and to prevent, where possible, companies entering into insolvency due to COVID-19.

The Corporate Insolvency & Governance Bill became law today - having had its first reading just over a month ago.

In summary, the provisions in the Act allow for:

Extension of tenant protection provisions

Government intervention in the commercial landlord and tenant relationship has created significant, but time limited, restrictions upon some of the remedies available to a commercial landlord against a non-paying tenant. These restrictions are well known but the period during which they will apply has now been extended:

On 26 June, the long-awaited Corporate Insolvency and Governance Act 2020 became law providing the UK (but with separate provisions for Northern Ireland) with temporary and permanent changes to insolvency law aimed at helping businesses manage the economic implications of COVID-19 including:

Permanent measures

On 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.