CIGA 2020: further extension to temporary COVID-related measures

CIGA 2020: further extension to temporary COVID-related measures

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As the UK slowly emerges from the second wave of the COVID-19 pandemic, the government has announced the further extension of the duration of certain temporary measures initially introduced pursuant to the Corporate Insolvency and Governance Act 2020 (CIGA). The previous extension of these measures was considered in our earlier article, a copy of which can be seen here.   

The provisions of the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021 (the Regulations) were laid before Parliament on 24 March 2021 and will be effective from 26 March 2021.

The Regulations can be seen here.

In summary, the Regulations provide that the:

  • Current temporary restriction on the use of statutory demands and winding up petitions in circumstances where a company’s inability to pay is due to COVID-19 will continue until 30 June 2021.
  • Temporary relaxation of the eligibility criteria for entry into a moratorium under Part A1 of the Insolvency Act 1986 will continue until 30 September 2021. This means that companies which have been subject to certain insolvency processes within the previous 12 month period will continue to be able to enter into a moratorium, as will companies subject to a winding up petition (without the need to first make a court application).
  • Temporary relief provided for small suppliers from the prohibition on the use of insolvency-related termination clauses (“ipso facto” provisions) in contracts will continue until 30 June 2021, providing certainty that such small suppliers may continue to rely upon insolvency termination rights against contractual counter-parties while they seek to recover from the effects of the pandemic.
  • Temporary suspension of wrongful trading liability for directors will continue until 30 June 2021, ensuring some protection for directors of companies in financial difficulty from being held personally liable under this head of claim for debts incurred while their companies continue to trade through the pandemic.

The Regulations swiftly follow the government’s announcement earlier this month that the current moratorium on commercial property tenant evictions would also be extended until at least the end of June 2021.

Although not a surprise, the extension of these temporary measures clearly signifies the government’s view that, while there may now be some light at the end of the tunnel as regards the COVID-19 pandemic, businesses and the wider economy are still struggling and are likely to require continued support in their efforts to return to pre-pandemic profitability.


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