On 12 August 2020, we wrote about three important judicial decisions of the courts in England and Singapore relating to the enforcement of arbitration agreements over claims arising under insolvency laws.

“Government gives businesses much-needed breathing space with extension of insolvency measures”

The UK government has announced an extension of the following temporary insolvency measures introduced by Corporate Insolvency and Governance Act (CIGA), 2020.

Highlights include:

Corporate Insolvency: Temporary Measures extended

On 29 September 2020, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 ("the Regulations") will be laid before Parliament. It is expected that they will be passed without amendment.

The purpose of the Regulations is to extend certain of the temporary measures introduced by The Corporate Insolvency & Governance Act 2020 ("CIGA") to assist companies who are struggling to deal with the economic ramifications of lockdown.

Corporate Insolvency: Temporary Measures extended

From 30 September 2020, The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 ("the Regulations") are in force.

The purpose of the Regulations is to extend certain of the temporary measures introduced by The Corporate Insolvency & Governance Act 2020 ("CIGA") to assist companies who are struggling to deal with the economic ramifications of COVID-19.

As we mentioned in a previous post, the COVID-19 pandemic has generated a wave of bankruptcies that we expect to continue into 2021. Companies entering 2020 in a strong financial position may now need to quickly shed distressed assets and generate cash. A Chapter 11 reorganization is likely to be too long and burdensome for companies in this position.

With the Company Insolvency and Governance Act 2020 (CIGA 2020) grabbing all the headlines, the Finance Act 2020 (FA 2020), which received Royal Assent on 22 July, has gone somewhat under the radar. However, it has the potential to have an even greater impact on the restructuring market than CIGA 2020.

The two principal measures being brought in are:

The Finance Act received Royal Assent on 22 July 2020, bringing in significant changes for the restructuring market, as well as businesses that become insolvent.

The two principal measures being brought in are:

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.

The Second Circuit affirmed the judgment of lower courts upholding the application of certain swap agreement safe harbors in section 560 of the U.S. Bankruptcy Code (the Bankruptcy Code).

The increasing number of high-profile bankruptcies across a number of commercial hubs has brought renewed focus on important questions of jurisdiction arising out of the tension between local insolvency regimes on the one hand, and parties’ arbitration agreements on the other.