The rapid onset of the COVID-19 pandemic, coupled with the drastic lockdown restrictions, has left many businesses – particularly those that rely on heavy footfall – in dire financial circumstances.

Businesses are therefore seeking tools to help them weather this storm and light-touch administration is an option that continues to rear its head.

What is it?

Yesterday (30 July), the Insolvency Service published its quarterly insolvency statistics for April to June 2020 (Q2 20).

Some may be surprised to learn that, during these uncertain times, company insolvencies in England and Wales have declined by one-third compared to the same quarter ending June 2019 (Q2 19).

By way of a breakdown, and by comparing Q2 20 with Q2 19, the numbers of:

The first half of 2020 saw a wave of company voluntary arrangements (CVAs) as companies explored their restructuring options against the backdrop of a darkening economic outlook.

On 26 June 2020, the eagerly anticipated Corporate Insolvency and Governance Act 2020 (“CIGA”) came into force. The result is that the changes made to insolvency law will now hinder the ability of landlords to recover unpaid rent from its tenants. We look at how the provisions of CIGA do this and the remaining options available to landlords to recover overdue rent.

What has CIGA changed?

(a) Statutory demands

Last week, ICSA (The Chartered Governance Institute) published a new guidance note on shareholder meetings under the Corporate Insolvency and Governance Act 2020 (CIGA). It has been drafted with a number of other organisations, with the support of the GC 100 (the Association of General Counsel and Company Secretaries working in FTSE 100 companies).

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.

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

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 recent Court of Appeal judgment in the case of Ezair v Conn [2020] EWCA Civ 687, handed down on 1 June 2020, has reiterated that section 234 of the Insolvency Act 1986 (“IA 1986”) provides only a summary procedure to assist insolvency office-holders in the exercise of their statutory duties. The Court made clear that section 234 IA 1986 does not provide scope for the determination of complex legal issues relating to the property in question.

Few, if any words can do justice to the impact COVID-19 has had on life in the UK over recent months. Legal practitioners’ use of the word “unprecedented” during this period is, well… unprecedented but even it doesn’t begin to describe the effect the pandemic has had on businesses across the country. There isn’t an industry or profession that hasn’t been touched by the effects of the pandemic and the legal sector is no different.