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The UK Government extends insolvency measures

The Corporate Insolvency and Governance Act

The Corporate Insolvency and Governance Act 2020 (CIGA) came into effect on 26 June this year as part of the government’s plan to help businesses struggling during the pandemic. The measures were originally due to expire on 31 December 2020, however, many of them have now been extended until the 31 March 2021.

A list of the insolvency measures that have been extended can be found below.

Statutory demands and winding up petitions

On 9 December 2020, the UK government announced its intension to extend the temporary suspension of the use of statutory demands and winding up petitions until 31 March 2021 to protect businesses from creditors seeking to recover coronavirus related debts. This means that a statutory demand or winding up petition cannot be issued during this period unless a creditor is certain that COVID-19 has not had a negative financial impact on the business.

This is the second time this year that these insolvency restrictions have been extended; they were first introduced from 1 March for statutory demand restrictions, and from the 27 April for winding up petition restrictions.

Termination of contracts

A supplier’s ability to terminate a supply contract or ask for additional payments whilst a company is going through an insolvency process remains restricted. Only small suppliers will remain exempt from the obligation to supply, on a temporary basis, until 31 March 2021.

Suspension of wrongful trading

The suspension of wrongful trading provisions has been extended until 30 April 2021. This removes the threat of personal liability arising from wrongful trading for directors who continue to trade through the pandemic, even if they are uncertain that the company will be able to avoid insolvency in the future. This removes the pressure on directors to close viable businesses to avoid potential liability.

Ban on business evictions

The temporary ban on business evictions and commercial landlords’ use of Commercial Rent Arrears Recovery (CRAR) has been extended until 31 March 2021. The extension will give landlords and tenants an additional three months to come to an agreement on unpaid rent. However, the government have made it clear that where businesses can pay any or all their rent, they should do so.


The government has announced that companies and other qualifying bodies with obligations to hold AGMs will be able to continue holding these meetings virtually until 31 March 2021.

R3 responds to the government’s decision

Christina Fitzgerald, Vice President of the insolvency and restructuring trade body R3 comments on the government’s decision to extend the above insolvency measures:

“[This] news will provide some welcome breathing space for many struggling firms that are currently trying to make the most of a choppy pre-Christmas trading period. These firms now have an extra three months largely free from the threat of creditor action, which means more time to try and get back on an even keel. However, despite the positive impact today’s announcement will have, these measures can’t be extended indefinitely. The big question for the Government is how these support measures can be withdrawn next year in a way that doesn’t lead to a cliff edge for businesses that have weathered an unprecedented year of trading difficulties.”

What to do if you are concerned

If you are concerned about your businesses finance or have noticed the early warning signs that your business is beginning to struggle financially, we would encourage you to seek advice as early as possible. The earlier you seek help, the more options available to you, and the more time you will have to consider what is best for your business.

At Bailey Ahmad, we offer free, confidential and no-obligation consultations with qualified, knowledgeable, and friendly insolvency practitioners. Click the button below to book your free consultation today.