Corporate Governance and Insolvency Bill 2020 (CIGA)

The UK Government introduced CIGA 2020 last summer, with the aim to help businesses cope with the impact of Covid-19. The law sets in place various temporary and permanent measures to support businesses in financial difficulty.

Temporary measures

What are the temporary measures that have been put in place?

Creditors were no longer able to force companies into liquidation via a Court order, to reclaim monies owed to them.

Wrongful trading laws were suspended. Previously, under the Insolvency Act 1986, a company was forbidden to continue trading if they knew that they’re in serious financial trouble and are likely to enter Liquidation.

What is the wisdom behind the temporary measures?

The measures have been put in place to increase the chances of business survival. The Government hopes that by allowing businesses to continue trading, despite being in financial difficulty, and giving them protection from their Creditors, will give them a chance to get back on their feet.

When do the temporary measures expire?

The suspension on wrongful trading laws expired on 30 September 2020 and companies were given protection from their creditors until 31 December 2020.

Permanent measures

Find out more about the permanent measures in place. These will continue to be active and in effect, even after Covid-19.

Moratorium

The moratorium will protect a company from Creditor legal action for 20 days. This gives the company some breathing room to think about their options without having to worry about Creditors.

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Suspension Clause

As part of CIGA 2020, the termination clause is void. Find out why.

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Restucture

When a business hits financial difficulty, it can restructure its models to become financial viable again and so it can continue trading. The plan is proposed to its Creditors and Members.

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