COVID-19 in the UK – extension to temporary insolvency measures

On 24 March 2021, further extensions were announced to the range of government measures aimed at protecting UK companies and directors affected by COVID-19. 

Measures extended to 30 June 2021

• Statutory demands and winding-up petitions continue to be restricted to protect companies from creditor enforcement action due to debts related to COVID-19.
• Wrongful trading directors' liability under wrongful trading provisions is relaxed for any worsening of a company's financial position in the relevant period (26 November 2020 to 30 June 2021).
• Small suppliers will not have to continue to supply a business in insolvency. However, larger suppliers will not be able to cease their supply or ask for additional payments while a company is going through a rescue process.

These measures are in line with the recent extension of the prohibition on commercial landlords forfeiting leases for non-payment of rent and on the use of commercial rent arrears recovery to 30 June 2021.

Measures extended to 30 September 2021

Some of the requirements for entering into the new moratorium procedure will remain relaxed until 30 September 2021. This three-month extension after the end of other restrictions may provide struggling businesses with easier access to much needed breathing space from their creditors while they're looking to manage debt and trade out of their financial difficulties.

Next steps

Although further extensions of these measures beyond June and September 2021 are possible, businesses should use this opportunity to work with their stakeholders and start planning now for the inevitable easing of restrictions and government support. To discuss these plans further, please reach out to a member of our Restructuring & Insolvency team.