On 20 May 2020, the UK Government published the Corporate Insolvency and Governance Bill (“CIGB” or the “Bill”) which proposes several changes aimed at improving the chances of company rescue and better overall returns for creditors. One of the proposed changes is to restrict parties’ ability to exercise contractual termination rights where a company enters into an insolvency or restructuring procedure, meaning that for most suppliers and supply contracts a termination clause will be ineffective upon insolvency. This will align the approach in the UK with that of a number of other jurisdictions.

These clauses can be referred to as “ipso facto” clauses; ipso facto translating to ‘by the very fact’. This extrapolates to situations where a party seeks to terminate a contract by the very fact of insolvency.


Continue Reading Corporate Insolvency and Governance Bill – Restrictions Placed on the Exercise of Contractual Termination Provisions

On 20 May 2020, the UK government announced the Corporate Insolvency and Governance Bill (the “Bill”), introducing a mixture of permanent and temporary measures, the latter being in response to the financial challenges companies are facing as a result of the Covid-19 pandemic and lockdown. In the absence of extensive consultation with insolvency practitioners and industry experts, it remains to be seen how effective the measures will be in practice.

As anticipated, a new standalone moratorium, overseen by a “monitor”, has been introduced. The provisions largely mirror those put forward during the limited consultation in 2018 – the purpose being to provide a company with the breathing space to explore a rescue or restructuring of the business, which includes the newly introduced restructuring plan. It is not intended that the company has the form of rescue/restructuring in mind at the time the moratorium is applied for and the moratorium is not a gateway to any particular insolvency process. Notably, the moratorium enables the directors to remain in day to day control of the business and enables them to lead discussions regarding rescue and restructuring, albeit we expect that the monitor will provide invaluable knowledge and guidance in crafting the best form of rescue/restructuring. Current timelines indicate that companies may be able to seek this new moratorium as early as the end of June 2020.


Continue Reading Standalone Moratorium for Companies – Changes Introduced by the UK Corporate Insolvency & Governance Bill

The UK Government has, in keeping with past practice, used the arrival of the bank holiday weekend to update the Coronavirus Job Retention Scheme. It has now published a second iteration of the Treasury Direction, which we have reviewed.

To read our commentary on the updated Direction, please visit MayerBrown.com.

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Following our recent update on Life in the Time of Corona, Part 3: Handling Collective Consultation in the UK, we have produced a practical checklist that highlights the steps that employers should consider when handling collective consultations in the UK during these challenging times, particularly when staff are working remotely.

To download the checklist,

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.

Wrongful trading is a claim which can be brought (with personal liability) against a director, when a company has entered insolvent liquidation or administration and the director knew or ought to have concluded that there was no reasonable prospect that the company would avoid such proceedings, but nevertheless continued to trade the business. The defence to the claim is that the director took every step to minimise potential loss to creditors. This has understandably concerned many boards of directors during the COVID-19 pandemic and the consequent uncertainty and, therefore, any relaxation to enable confidence to trade is likely to be welcome.


Continue Reading Wrongful Trading – Temporary COVID-19 Changes Introduced by the Corporate Insolvency & Governance Bill

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.

Although the announcement by the UK Government on 23 April 2020 referred to the restrictions on issuing winding-up petitions as being part of further measures to “protect the UK high street from aggressive rent collection and closure“, the Corporate Insolvency and Governance Bill 2020 (the “Bill”) is not sector specific – the changes apply to any company that can be wound up and to any type of debt, not just rent liabilities.


Continue Reading Winding-Up Petitions – COVID-19 Temporary Restrictions Introduced by the Corporate Insolvency and Governance Bill 2020

On May 20, 2020, the UK Government published its much anticipated draft legislation (the Corporate Governance and Insolvency Bill) which aims to provide greater opportunities for company survival and better returns for creditors during and after the COVID-19 emergency. The Government intends to ask Parliament to expedite progress of the Bill.

If enacted in its current form, the Bill will introduce greater flexibility into the UK’s insolvency regime, allowing companies breathing space to explore options for rescue while supplies are protected, so that they have the maximum chance of survival. It will also temporarily suspend parts of insolvency law to support directors to continue trading through the COVID-19 pandemic without the threat of personal liability, and to protect companies from aggressive creditor action.


Continue Reading UK Government Publishes UK Restructuring and Insolvency Law Reforms

As one of the sadder consequences of the Coronavirus pandemic, most employers are going to have to look closely at whether or not to make significant job cuts to their current headcount. While some employers may view this as an opportunity to recruit and acquire staff either generally or in particular areas, most employers are

The latest guidance from BEIS, published 13 May, confirms how holiday entitlement and holiday pay is to work during the Coronavirus pandemic. The Guidance Note, which is informative in some areas but makes a number of quite odd suggestions in others, is simply guidance. An employee’s statutory rights for holiday leave and holiday pay are

This update follows on from the Article we recently published on the many areas of planning that UK employers could usefully carry out in preparation for a return to work. We now have had the announcement from the Prime Minister on Sunday, May 10, 2020, and the advisory document, “New Guidance Launched to help