Vol 17 (2020) - Issue 4

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Wasted Breath? Insolvency Reforms in Response to COVID-19

Synopsis
On 28 March 2020, the Business Secretary announced insolvency reforms in response to the business impacts of COVID-19, designed 'to give companies breathing space and keep trading while they explore options for rescue'. A Bill passed in Parliament and the Corporate Insolvency and Governance Act 2020 ('CIGA') came into force on 26 June, containing the most significant reforms to insolvency legislation this generation of practitioners has seen. Its highlights include a debtorin-possession moratorium, a new restructuring plan and a rewriting of the law relating to contractual insolvency termination rights.

The CIGA's effect on market practice and attitudes will no doubt take months, if not years, fully to form. In this article we consider key elements of the reforms, focusing on the measures designed to save companies in immediate crisis rather than the new restructuring plan, and ask whether they will have the desired effect.