Corporate Insolvency and Governance Act 2020
Last amended by The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Early Termination of Certain Temporary Provisions) Regulations 2020 in 2020. 7 recorded amendment effects (legislation.gov.uk changes data).
Independent editorial summary — not the official statute text. Read the official version on legislation.gov.uk.
Summary
The Corporate Insolvency and Governance Act 2020 (CIGA) introduced the most significant reforms to UK insolvency law in over 20 years. Partly driven by the COVID-19 pandemic but drawing on years of consultation, it created three new permanent tools: a standalone moratorium giving financially distressed companies breathing space, a new restructuring plan procedure, and restrictions on suppliers terminating contracts when a customer enters an insolvency procedure.
Key Points
- Standalone moratorium (Part 1) — 20 business-day initial period (extendable) preventing creditor action while the company seeks rescue, supervised by a monitor
- Restructuring plan (Part 9, inserting new Part 26A Companies Act 2006) — cross-class cram-down mechanism allowing the court to sanction a plan even if not all classes of creditor agree
- Ipso facto clauses restricted (s.233B Insolvency Act 1986) — suppliers cannot terminate contracts or charge higher prices solely because a customer enters an insolvency procedure
- Temporary COVID-19 measures — suspension of wrongful trading liability, restrictions on winding-up petitions for COVID-related debts (temporary provisions expired)
- Small company moratorium — simplified moratorium procedure for small companies
- Standalone moratorium procedure
- New Part 26A restructuring plan with cross-class cram down
- Restrictions on ipso facto clauses
Parts & Sections
Amendments History
2020 — The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Early Termination of Certain Temporary Provisions) Regulations 2020
7 recorded amendment effects (legislation.gov.uk changes data).
2020 — The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020
5 recorded amendment effects (legislation.gov.uk changes data).
2020 — The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2021
4 recorded amendment effects (legislation.gov.uk changes data).
2020 — The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Schedule 8) (Early Termination of Certain Temporary Provisions) Regulations (Northern Ireland) 2020
4 recorded amendment effects (legislation.gov.uk changes data).
2020 — The Corporate Insolvency and Governance Act 2020 (Amendment of Certain Relevant Periods) Regulations (Northern Ireland) 2020
4 recorded amendment effects (legislation.gov.uk changes data).
Frequently asked questions
- What are the main permanent changes made by the Corporate Insolvency and Governance Act 2020?
- The Corporate Insolvency and Governance Act 2020 introduced three new permanent tools for UK insolvency law. These include a standalone moratorium to give financially distressed companies breathing space, a new restructuring plan procedure, and restrictions preventing suppliers from terminating contracts solely because a customer enters an insolvency procedure.
- How does the standalone moratorium work for a company in financial distress?
- A standalone moratorium provides a company with an initial period of 20 business days, which can be extended, where creditors are prevented from taking action. This breathing space allows the company to seek rescue. The process is supervised by a monitor to ensure it is managed correctly.
- What is a restructuring plan and how does it differ from other insolvency procedures?
- A restructuring plan is a procedure that allows a court to sanction a plan even if not all classes of creditors agree. This is known as a cross-class cram-down mechanism. It was introduced by inserting new Part 26A into the Companies Act 2006.
- Can a supplier cancel a contract just because a customer becomes insolvent?
- Under the Act, suppliers are restricted from terminating contracts or charging higher prices solely because a customer enters an insolvency procedure. These restrictions apply to what are known as ipso facto clauses, which were previously common in commercial agreements.
- Did the Act include any temporary measures related to the pandemic?
- The Act included temporary measures such as the suspension of wrongful trading liability and restrictions on winding-up petitions for COVID-related debts. However, these temporary provisions have expired. The Act also introduced a simplified moratorium procedure specifically for small companies.