- The Corporate Governance and Insolvency Act (CGIA) came into force on 26 June 2020, with the intention of providing businesses in financial difficulty with flexibility and breathing space and additional assistance (such as the protection of supplies) in order to maximise their chances of survival.
- It contains a number of provisions which will impact on construction contracts and professional appointments, in particular on the rights of a supplier under a contract for the supply of goods and services (e.g.
Termination for insolvency: a clause for concern?
Perhaps influenced by the fall of some significant UK brands in recent years, the actions of suppliers of insolvent firms have long been on the radar of the Government, initially through the introduction of The Insolvency (Protection of Essential Supplies) Order 2015 and most recently through the consultation and consideration relating to the Corporate Insolvency and Governance Act 2020, which came into force on 26 June 2020.
In a case litigated by the authors, the United States Court of Appeals for the Seventh Circuit held in In re Marzieh Bastanipour, Case No. 20-1373 (7th Cir. June 10, 2020) that Chapter 13 debtors are not permitted in forma pauperis fee waivers absent a showing of extraordinary circumstances.
In 2018, the Debtor, Marzieh Bastanipour, filed a Chapter 13 bankruptcy petition in the U.S. Bankruptcy Court for the Northern District of Illinois. This was the third Chapter 13 petition filed by the Debtor since 2013.
Questions and answers on the effect of the part A1 moratorium to be introduced by the Corporate Insolvency and Governance Act 2020 from a Lender's perspective.
The Corporate Insolvency and Governance Act 2020 (CIGA) was enacted on 26 June 2020 and includes measures both as a response to COVID-19, which apply temporarily, and measures which apply permanently, part of a long-planned package of insolvency reform measures.
The Corporate Insolvency and Governance Act 2020 (Act) received Royal Assent on 25 June 2020. The majority of its provisions commenced on 26 June 2020, with the exception of the temporary measures which have retrospective effect from 1 March 2020.
1. TEMPORARY PROVISIONS
WHAT HAS CHANGED?
The Act outlines certain insolvency law reforms in response to the COVID-19 crisis, including a temporary suspension of wrongful trading provisions for company directors. The suspension applies retrospectively from 1 March 2020 until 30 September 2020, and aims to encourage directors to continue to trade during the pandemic.
This change will not affect the directors’ duties regime. Directors must continue to comply with their duties, in particular those owed to the company's creditors where the company is, or is likely to be, insolvent.
Force majeure clauses and the doctrines of impossibility and/or impracticability remain among the most-discussed legal topics of the COVID-19 pandemic. Courts across the country, finally open, are grappling with those issues and giving some insight as to how these topics may play out in future cases.
The Corporate Insolvency and Governance Bill (CIGB) was introduced to Parliament on 20 May 2020 and includes measures both as a response to COVID-19, which apply temporarily, and measures which apply permanently, part of a long-planned package of insolvency reform measures.
Pursuant to paragraph 11 of the order of Mr Justice Foxton dated 20 May 2020 (the ‘Order’), the Viscount of the Royal Court of Jersey (the Fifth and Tenth Respondent) has, on the request of Harbour Fund II LP (the Seventh Respondent), instructed Addleshaw Goddard to post a copy of Schedule 4 to the Order on its website.
Schedule 4 of the Order reads as follows:
CLAIM NO: CL-2017-000323
Seyfarth Synopsis: In acquiring a company in bankruptcy, there is often a tendency to think this guarantees the purchaser will be “free and clear” of any liability (including so-called “successor liability”). This is not necessarily so with wage and hour liability, particularly if the purchaser merely continues to operate virtually the same business that was acquired.