On 29 September 2020, the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 came into force. The intention behind the regulations is to extend some, although not all, of the temporary provisions created by the Corporate Insolvency and Governance Act 2020 (CIGA) earlier this year.
As not all of the temporary CIGA provisions have been extended, those not referred to in the new regulations ceased to apply as of 30 September 2020. One provision that has not been extended is the measure relating to wrongful trading. As of 1 October 2020, directors are, once again, to be held personally liable to creditors for allowing a company to continue trading when they know (or ought to know) that it is insolvent.
Under the new regulations, the extension periods are different depending on the specific provision. There are now various end dates that companies and practitioners need to be aware of.
The following are the extended CIGA provisions and revised end dates:
- The temporary measures relaxing how companies and other bodies meet have been extended to 30 December 2020. Companies and other bodies are therefore permitted to continue holding virtual meetings (with the exception of board meetings) at which votes and decisions can be made.
- The restrictions imposed on statutory demands and winding-up petitions will continue until 31 December 2020. It therefore remains the position that no creditor can petition for the winding-up of a company when relying on a statutory demand. Further, the only way a creditor is able to issue a winding-up petition is where they have reasonable belief that (a) coronavirus has not had any financial impact on the company, or (b) the company would not have been able to pay its debts even if the virus had no financial impact.
- The new moratorium procedure will continue until 30 March 2021, allowing companies to continue trading provided they can show that the moratorium procedure will help resolve their financial issues. This will prevent creditors bringing enforcement action against a company when they are in the period of moratorium unless they have leave of the court.