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The Corporate Insolvency and Governance Act 2020 was recently given Royal Assent, providing what could be invaluable assistance to businesses in the current climate of difficult trading.

Included in the bill are a number of new corporate restructuring options as well as temporary changes to insolvency law that have been announced by the government since the onset of the COVID-19 pandemic.

Notably, the bill introduces a new standalone moratorium option for companies that are insolvent or likely to become insolvent. The moratorium restricts creditors from taking steps to recover debts and/or enforce security for a minimum period of 20 days. The company can trade under the control of its directors, overseen by an insolvency practitioner, while a turnaround strategy is being implemented. If additional time is required after the 15th day of the period starting, an extension of 20 days is allowable without the approval of creditors. Any further extension to the 40-day moratorium requires creditor approval.

Paul Newbold, partner at Torgersens said, ‘This new bill offers real help to companies that would be trading profitably had it not been for the pandemic. The moratorium offers a breathing space for company directors to work on a recovery plan without the immediate worry of creditors knocking at their door.’

For further information, please see the GOV.UK website which has a number of factsheets about the bill, including an overview and more details about the moratorium.

About the Author

Paul Newbold Image

Paul Newbold

Partner
After qualifying with KPMG where he gained significant audit experience, Paul joined Torgersens in 1991 and became the firm’s audit partner in 2000. Paul employs his broad range of financial skills to provide commercial and accounting advice to a range of owner-managed businesses in the independent retail, education and professional services sectors. He also has extensive experience dealing with charities, Registered Social Landlords and not-for-profit organisations and co-operatives.   Outside of work, Paul likes to visit Eastern France and South-West German and read novels by David Morrell, Michael Blake and Harper Lee. He also likes watching films, his favourite is The Shawshank Redemption.

To get in touch please e-mail paul.newbold@torgersens.com.

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