The new Corporate Insolvency and Governance Act came into effect from the 26th June 2020.
The bill introduced a Moratorium. If an application is agreed by the courts, it will allow businesses some additional time and protection from creditors when they experience financial difficulty.
The main purpose of the act is to reduce the number of entities entering into corporate insolvency at a time of unprecedented disruption to many industries and sectors across the UK economy.
Some Trade Credit Insurers have issued guidance notes on how these changes will apply and the main point of note is that a Moratorium is accepted as being an event covered by the policy. A moratorium is also to be viewed as a Serious Notifiable Event, and you should contact your broker to seek advice should you be faced with the situation.
Some temporary measures in the Act will expire on the 30th September 2020 and relate to:
- winding up petitions and statutory demands
- wrongful trading
- Annual General Meetings and General Meetings
- Companies House filing requirements
Other aspects of this process include “Super Creditors” and how each carrier will deal with waivers in respect to the standard allocation of recoveries.
More detail will become apparent over time, however it is important our clients are aware of the changes and the impact this will have on their policy. We are on hand to advise, should the situation arise.