The Corporate Insolvency and Governance Act 2020 has introduced a new standalone moratorium procedure for companies.1 The moratorium is part of a package of significant legislative reforms contained in the Act, intended to enhance the UK’s restructuring rescue culture. These were originally consulted on between 2016 and 2018 and were fast-tracked to deal with the COVID-19 pandemic.
Overview
On 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.
Final amendments to the Corporate Insolvency and Governance Bill were approved by the House of Lords on 23 June 2020, and by the House of Commons on 25 June 2020. The Act came into force on 26 June 2020, however certain provisions have retrospective effect from 1 March 2020. It will have a significant impact on defined benefit pension schemes, and the ability of pension scheme trustees to take action if the scheme's employer is struggling. This legal update explores the Act's key provisions through a pensions lens.
The Corporate Insolvency and Governance Act 2020 came into effect in the United Kingdom on 26 June 2020. It makes major changes to UK insolvency law. The full extent of those changes will only become apparent in the following months, as the courts and insolvency practitioners grapple with its 254 pages. Three strange aspects of the Act will fundamentally affect how financings to UK companies are structured and documented.
On 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.
As part of these measures, a new provision has been inserted into existing legislation which will curtail the ability of suppliers to terminate supply contracts when a customer becomes insolvent (the so called `ipso facto regime').
The new moratorium regime
What are the potential implications of the new moratorium regime set out in the Corporate Insolvency and Governance Act 2020 (the “Act”) for aircraft lenders, lessors and airlines? In the first of a series of three articles, we consider this new law.
On 25 June 2020, the Corporate Insolvency and Governance Act 2020 (the Act) received Royal Assent, and the majority of its provisions are now in force. The Act has introduced a number of permanent reforms and temporary measures, which together represent the most significant change to English insolvency law in nearly 20 years.
Permanent Reforms
The permanent reforms include:
An unfortunate but inevitable consequence of the economic downturn induced by COVID-19 is that an increasing number of construction companies will enter into insolvency. In Bresco Electrical Services Ltd (in liquidation) v. Michael J Lonsdale (Electrical) Ltd [2020] UKSC 25, the Supreme Court has provided some respite to contractors in liquidation by finally confirming their unfettered right to refer construction disputes for resolution by adjudication.
On 26 June, the long-awaited Corporate Insolvency and Governance Act 2020 became law providing the UK (but with separate provisions for Northern Ireland) with temporary and permanent changes to insolvency law aimed at helping businesses manage the economic implications of COVID-19 including:
Permanent measures
On 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.