On 26 June 2020 the Corporate Insolvency and Governance Act 2020 came into force, having received Royal Assent. The Act is the largest change to the UK’s corporate insolvency regime in more than 20 years. It’s designed to relieve the burden on businesses during the COVID-19 outbreak, and allow them to focus all their efforts on continuing to operate. The new measures will affect limited companies filing their accounts with Companies House, and will also introduce changes to the insolvency regime.
Company filing requirements
At the start of the coronavirus pandemic, companies and other types of businesses registered at Companies House were given more time to file accounts. A three-month filing extension was announced from 25 March 2020 which had to be claimed in advance.
Companies House has now announced that it will automatically extend the deadlines for certain key statutory filing events, such as the filing of company accounts. From 27 June 2020, late filing deadlines will be automatically extended until 5 April 2021. Details of your new filing deadline will now show on the Companies House website.
The extension granted by the regulations will apply to your original filing deadline rather than being added onto the filing extension already granted by Companies House. And be aware that this is only a temporary measure due to COVID-19. Companies House won’t automatically extend any filing deadlines that fall on 6 April 2021 or later. So if your company’s filing deadline falls on 6 April 2021 or later and you need more time to file your accounts then you’ll need to apply for an extension.
Help with insolvency
The new Act also introduces measures to buy distressed businesses extra time if they need to get advice and seek a rescue package. If your business is really struggling financially, you can apply for a moratorium, which is formal breathing space in which to explore rescue and restructuring options, free from creditor action.
The directors must file for or apply to court for a moratorium. A new role of ‘Monitor’ has been introduced, a licensed insolvency practitioner who will be appointed to oversee the process. The moratorium is an extendable 20 working day period which gives businesses protection while they seek professional restructuring advice. The Act also extends the suspension of termination clauses when a company enters into an insolvency procedure, and introduces a new restructuring plan sanctioned by the court that will bind creditors to the plan.
The Monitor must inform Companies House about the start of a moratorium. Directors remain in control of the company and still need to meet their filing obligations. To make sure the company’s record is accurate and up to date, any notices including applications to extend the moratorium must be delivered to Companies House as quickly as possible.
An explanation of each of the measures in the new Corporate Insolvency and Governance Bill 2020 is available in a series of government factsheets.
If you are in difficulty, please talk to us and we will do our best to help you review all available options.
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