On 25 June 2020, the Corporate Insolvency and Governance Act received Royal Assent. This new legislation has been passed in response to the challenges that businesses are facing as a result of COVID-19.
Changes to Filing Deadlines
The most obvious impact is the secondary legislation, which came into effect on Saturday 27th June, relaxing the standard filing deadlines for documents that must be submitted to Companies House. These temporary provisions contain extensions to filing deadlines where the current deadline falls on or between 27th June 2020 and 5th April 2021. The key changes are:
- Confirmation statements and event-driven filings (eg. Change of address or Directors) must now be delivered to Companies House within 42 days (rather than 14).
- Company accounts deadlines have in most cases been extended by three months (unless the company had already applied for an extension).
- Mortgages and charges must now be registered within 31 days (rather than 21).
You may already have noticed the changes to your filing deadlines on the Companies House website.
The Act has introduced a new standalone moratorium procedure for companies, intended to enhance the UK’s restructuring rescue culture. The moratorium is a director led process which leaves the directors in situ to trade the company with a licensed insolvency practitioner acting in the role of “monitor” overseeing the company’s affairs. The aim is to give companies some breathing space from creditor action to formulate a turnaround plan without adding significant costs. The moratorium is focused on the recovery of the company rather than the realisation of its assets.
The moratorium provides 20 business days’ protection from certain creditor action. It can be extended for a further 20 business days without any consent, or for longer with consent of the pre-moratorium creditors or the court. Early termination is also possible.
The Monitor must view that a rescue of the company will be possible. If the Monitor changes their view that rescue is possible, the moratorium must end.
During the moratorium, the company must continue to pay certain debts including newly incurred liabilities, payments for new supplies, rent in respect of the moratorium period, certain payments due to employees, and debts under financial contracts, including lending contracts. If those debts are not paid, the moratorium will end. Support from lenders will therefore be required.
If you have any queries please contact Jackie or Andrew.