On 26 March 2021 insolvency measures supporting businesses during the pandemic and aiding their recovery were extended.

Once again, the Government has legislated to extend existing insolvency temporary measures through the CIGA (Coronavirus) (Early Termination of Certain Temporary Provisions) Regulations 2020 and the CIGA (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020. Additionally, the restrictions on forfeiture by landlords have been extended.

On April 12, the U.S. Bankruptcy Court for the District of Massachusetts entered judgment in favor of a national bank, determining that the plaintiff failed to, among other things, “carry his burden to prove that he incurred injury” concerning economic or emotional distress damages as a result of the original lender’s violations.

On April 6, the Small Business Administration (SBA) updated its Paycheck Protection Program (PPP) frequently asked questions to clarify when an applicant or owner is no longer considered to be “presently involved in any bankruptcy” for PPP loan eligibility purposes.

On November 25, the U.S. Court of Appeals vacated summary judgment in favor of defendants in an action alleging the defendants violated the FDCPA by attempting to collect a debt that was discharged in a bankruptcy proceeding and no longer owed.

The government has confirmed that restrictions on commercial landlords on presenting a winding-up petition against tenants that have not paid rent are to be extended to the end of 2020.

The announcement follows confirmation last week that it has extended its moratorium preventing the eviction of commercial tenants for non-payment of rent until the end of 2020.

Whilst the announcement will be welcomed by tenants supporting them into the important Christmas trading period, landlords will undoubtedly feel that their own financial position is being ignored.

On August 12, the U.S. District Court for the District of Colorado reversed in part a bankruptcy court judgment, concluding that the OCC’s valid-when-made rule applied but that discovery was needed to determine whether a nonbank entity was the true lender.

This is the second of two articles considering the corporate insolvency aspects of the Corporate Insolvency & Governance Act 2020 (the Act).  In the first article, we looked at the temporary measures introduced by the Act in response to the Covid-19 crisis and this second article explains the permanent reforms of insolvency law provided for in the Act.  These changes came into effect on 26 June 2020.

This first article comments on the temporary measures that are designed to alleviate the economic impact of COVID-19, namely the suspension of wrongful trading and restrictions placed on creditors serving statutory demands and winding-up petitions. These temporary provisions are intended to provide businesses with some breathing space during the current pandemic whilst they consider rescue options.

The decisions made and actions taken, or not taken, by companies and their directors in response to the COVID-19 crisis are being intensely scrutinised by regulators, shareholders, and creditors alike. It is anticipated that some businesses may face claims relating to their poor contingency planning and their practical and wider reactions to the crisis. So, an increase can be expected in claims on directors and officers (D&O) insurance policies.

The High Court has dismissed applications to restrain the presentation of winding up petitions for reasons relating to the Covid-19 pandemic.