Government extends ability to amend insolvency and governance legislation

Published 19 julio 2021

Practitioners are likely to be familiar with the provisions of The Corporate Insolvency and Governance Act 2020 (“CIGA 2020”) which introduced new permanent measures to complement the insolvency regime as well as a number of temporary measures to support business dealing with the effects of the COVID-19 pandemic.

CIGA 2020 also made provision for the Secretary of State to modify the effect of corporate insolvency or governance legislation by regulations. The terms on which legislation could be modified were set out in wide terms albeit the ability to make changes was set to expire on 30 April 2021.

The (Coronavirus) (Change Of Expiry Date) Regulations 2021 (“Regulations”) has extended the date by which the Secretary of State can amend insolvency and corporate governance legislation to 29 April 2022.

The power afforded to the Secretary of State has already been exercised when the liability for wrongful trading was suspended for the period from 26 November 2020 to 30 April 2021.

In the explanatory memorandum to the Regulations it is explained that “the future impact of the pandemic on business and the insolvency regime remains uncertain” and “it is reasonably foreseeable that some economic impact of the pandemic will continue to be felt even after the vaccination programme has concluded and in any case it will certainly continue beyond the current expiry date of the section 20 power on 30 April 2021.”

The Regulations will allow the government to act quickly in response to any unforeseen challenges arising as a result of the pandemic and appear to provide the government with flexibility to act should it be necessary to do so. Insolvency practitioners and others who are impacted by the relevant legislation will need to be alert to any future changes which could be enacted at short notice.