Kirkland Alert

UK Temporary Restructuring/Insolvency Measures — Certain Extended, But No Extension to Wrongful Trading Adjustments

At a Glance


The Corporate Insolvency and Governance Act 2020 (the “Act”) was enacted on 25 June, implementing landmark measures to improve the ability of companies to be efficiently restructured. The Act also included temporary measures to alleviate pressure arising from the COVID-19 crisis. These temporary measures were originally due to expire on 30 September 2020. On 24 September 2020, the government announced that certain of the temporary measures would be extended for either three or six months.1 Notably, adjustments to wrongful trading rules will not be extended and will now expire automatically on 30 September.

The three core aspects of the Act — i.e., the new restructuring plan procedure, the stand-alone moratorium and restrictions on enforcement of ipso facto clauses — are permanent and broadly unaffected by this extension.2 The first restructuring plan — that of Virgin Atlantic — has recently been sanctioned; for further information, see our Alert.

The temporary measures are designed to provide breathing space during the COVID-19 emergency. Given the crisis is continuing and the UK is entering a second wave of the pandemic, the extension of the measures is no surprise, and offers welcome continued support to UK businesses.

Effect of extension

In essence, the effect of the extension is that:

  • statutory demands made between 1 March and 31 December 2020 are void;
  • winding-up petitions presented from 27 April to 31 December 2020 are suspended where a company’s inability to pay is the result of COVID-19;
  • restrictions on the court’s jurisdiction to make a winding-up order will apply until 31 December 2020;
  • small business suppliers are exempt from the prohibition on enforcement of ipso facto clauses until 30 March 2021;
  • until 30 March 2021, certain of the conditions to the commencement of a moratorium are eased; 
  • landlords are prevented from using commercial rent arrears recovery (CRAR) before 31 December 2020; 
  • commercial leases cannot be forfeited for non-payment of rent or other sums due between 26 March and 31 December 2020; and  
  • the current relaxation of requirements for general meetings, in order to facilitate virtual meetings, continues until 30 December 2020.

For full details, see our detailed deck on the Act, updated to reflect this extension.


1. Under The Corporate Insolvency and Governance (Coronavirus) (Extension of the Relevant Period) Regulations 2020.

2. Subject to two small points: the extension of the temporary exemption of small business suppliers from the prohibition on enforcement of ipso facto clauses, and the extension of the temporary easing of conditions to the commencement of a moratorium.

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