Suppliers can no longer terminate contracts, refuse to supply goods or services or amend payment terms with an insolvent customer due to its insolvency, save in limited circumstances. The new rules - brought in by the Corporate Insolvency and Governance Act 2020 (“CIGA”) - governing protection of supplies significantly restrict parties’ autonomy in relation to customer insolvency and will be a cause of concern for many suppliers.

New protection of supplies to insolvent companies

In his judgment handed down on 7 May 2020 in the case of Gregory v ARG (Mansfield) Ltd [2020] EWHC 1133 (Ch), HH Judge Davis-White QC, sitting as a Judge of the High Court, commented (on an obiter basis) that where a company regulated by the Financial Conduct Authority (the “FCA”) seeks to enter administration, section 362A of the Financial Services and Markets Act 2000 (“FSMA 2000”) and paragraph 29 of Schedule B1 of the Insolvency Act 1986 (the “Insolvency Act”), require that writ

On 20 May 2020, the Corporate Insolvency & Governance Bill 2019-2021 was introduced to Parliament. With the Bill slated to be fast-tracked into law, here are some of the key insolvency aspects to be aware of.

Why now?

The extraordinary disruption to UK business caused by the COVID-19 lockdown has spawned much discussion about changes to existing insolvency laws to help businesses which are struggling to survive in this abnormal environment. One topic of discussion has been the so-called ‘light touch’ administration. Here we provide a quick overview of what this involves.

What do we mean by a ‘light touch’ administration?

It is now common knowledge that the Government has responded to the COVID-19 crisis with a number of protective measures, including the Coronavirus Job Retention Scheme (CJRS), which provides support to businesses that cannot maintain their current workforce because their operations have been severely affected by COVID-19. Under the CJRS, employers can apply for a grant to cover 80% of the wages (up to £2,500 per month) of employees who are placed on furlough leave.

In June 2019 the Government announced a plan to introduce a new “breathing space” scheme to protect individuals and families struggling with problem debt and to give those individuals and families extra help and time to get their finances under control.

Despite discussion in 2019 about corporate insolvency reforms and the reintroduction of the Crown Preference for certain tax debts, the Queens Speech on 19 December 2019 did not indicate any concrete plans to legislate for these areas this year. Airline insolvency, however, has made the list for 2020.

Why is airline insolvency a priority?

Following consultations on insolvency and corporate governance in 2017 and 2018, the Government recently published its response setting out some notable proposed changes to the existing insolvency and corporate governance legislation. Following the high profile failures of Carillion and BHS, the Government’s response is largely aimed at encouraging the recovery of viable companies, improving transparency and promoting responsible directorship. This article will primarily look at the proposed changes focused on facilitating a rescue culture.

In a judgment that will undoubtedly impact what has become fairly common practice when filing notices of intention to appoint an administrator (“NOITA”), the Court of Appeal has held in JCAM Commercial Real Estate Property XV Ltd v Davis Haulage Ltd[1] that a company seeking to give notice of intention to appoint under paragraph 26 of Schedule B1 to the Insolvency Act 1986 (the “Act”), and to file a copy o