The Corporate Insolvency & Governance Bill that aims to help companies survive the coronavirus fall-out was debated in the House of Commons today (3 June).
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The Corporate Insolvency & Governance Bill formally introduced in Parliament on 20 May got its first debate in the House of Commons on 3 June. On its fast-track route to becoming law it had both its second and third readings. It now goes to the Lords and then to The Queen for Royal Assent.
The Bill aims to help companies in temporary difficulties as a result of the coronavirus pandemic, although some of its measures will make permanent changes to insolvency law that, it has been calculated, will result in net benefits to business of around £2billion.
The changes will allow directors of a company to obtain a moratorium for the company by filing the relevant documents with a court. That will give them breathing space from their creditors and will make it illegal for suppliers to stop supplying them or from charging extra for goods.
Creditors will also be bound by the terms of a 'restructuring plan' even if they do not agree to the plan, although there are some safeguards for creditors.
The aim is for the insolvency regime to be flexible enough to meet the demands of the crisis as well as temporarily removing the threat of personal liability for wrongful trading by directors who try to keep their companies afloat, as long as they have followed the required procedures and reporting requirements.
Some of the temporary measures are intended to be retrospective to give immediate support to businesses during the pandemic.
There is widespread support for the measures in this Bill, including from the relevant professions and business groups.
The government says it has received many representations asking for the measures to be implemented immediately in response to this crisis to enable struggling businesses to continue to trade during the current situation and boost the economy once we emerge from it.