A winding-up petition is one of the most critical pieces in a creditor’s armoury where a debt remains unpaid. However, in these challenging times, the government clearly wants to provide a temporary shield to companies who are unable to pay their debts due to COVID-19.

While those in the restructuring and insolvency profession have been attempting to predict what the temporary suspension of the wrongful trading provisions proposed by the government might look like, the Corporate Insolvency & Governance Bill (the “Bill”) is not quite as anticipated.

The government has published the Corporate Insolvency and Governance Bill which, if passed, will significantly restrict suppliers’ ability to exit commercial agreements due to restructuring or insolvency-related causes.

That the current pandemic has thrown a curveball at many businesses is a given.

At the end of February, the Bank of Scotland Business Barometer reported that overall business confidence in the UK was at a net balance of 23%. Only two months later and confidence plunged to minus 29%.

The Corporate Insolvency and Governance Bill (the “Bill”) was laid before Parliament on 20 May 2020 and represents the most extensive changes in the insolvency landscape since the Enterprise Act came into force in 2003. Many of the proposals were originally consulted on in 2016, but were not progressed in light of Brexit until the COVID-19 crisis led to an urgent need for rapid and responsive reforms. The Bill is expected to come into force in June at the earliest.

The provisions of the Bill contain both:

The Corporate Insolvency and Governance Bill was finally introduced to Parliament on 20 May. It is now clear that the provisions of the Bill relating to statutory demands and winding up petitions will apply to Scotland without the need for the Scottish Government to pass further legislation.

Statutory demands

On 22 May 2020, Justice Black of the Supreme Court of NSW issued judgment In the matter of Wollongong Coal Limited and In the matter of Jindal Steel & Power (Australia) Pty Ltd [2020] NSWSC 614. The judgment sets out his Honour’s reasoning for granting the orders sought in a largely unprecedented application to effectively ‘re-enliven’ two schemes of arrangement which automatically terminated prior to being completed.

The highly anticipated Corporate Insolvency and Governance Bill (the “Bill”) was introduced to the House of Commons yesterday on 20 May 2020. Its aims appear to be simple: safeguard companies and maximise their chances of survival thereby preserving jobs.

The (the Bill) was given its first reading on Wednesday 20 May 2020. Parliament will not be considering the next stages of the Bill until 3 June 2020 so there is still some time, and possibly further amendments, before this is approved and given Royal Assent. More detailed notes will be provided once this Bill has been given Royal Assent, but the headline points of the current draft are:

Statutory demands

The Corporate Insolvency and Governance Bill was first read to Parliament on 20 May 2020. It is set to be fast tracked into legislation and will likely be law by 10 June 2020.

On 20 May 2020, the U.K. government published the Corporate Insolvency and Governance Bill (the bill), which includes measures designed to help businesses through the COVID-19 pandemic and features important substantive reforms to U.K. restructuring law, whose introduction has been accelerated by the crisis.

COVID-19-Related Measures:

The key temporary measures introduced by the bill are:

Statutory Demands and Winding up Petitions