The Insolvency Service has published its official three-year Post Implementation Review of the Corporate Insolvency and Governance Act 2020 (CIGA). The Review focused on the three permanent measures: 

• the moratorium
• the restructuring plan
• the suspension of contractual provisions terminating or amending the supply of goods or services  upon an insolvency event.

The permanent CIGA measures have been broadly welcomed by stakeholders. As of 30 June 2023, however, only 45 moratoriums and 21 restructuring plans have been obtained.  To increase uptake, the Review suggests certain modifications:

Restructuring Plan

• Reducing the costs of setting up and challenging a restructuring plan:
  - removing the need for two hearings
  - removing the ability to appeal.
• Professional guidance to assist practitioners on how much information to include in the restructuring plan proposal.  
• Multiple debtor entities to propose restructuring plans without requiring separate applications.
• Mandatory upside sharing so creditors would receive a share of future profits in a successful rescue.

Moratorium

• Amending the definition of 'financial services’ so that it is clear which liabilities are excluded from the payment holiday.
• Altering the priority of debts to clarify that monitor fees would be paid in a subsequent insolvency, should the moratorium fail to rescue the company.
• Guidance on matters including the role of the monitor, how the initial period of the moratorium can be extended and the possibility of reputational risk for practitioners.

What next?

No dates have been set for future consultations on these amendments.  In the meantime, as more companies experience financial distress we may see an increased use of these measures in any event.

Find out more

To discuss the issues raised in this article in more detail, please contact a member of our Restructuring & Insolvency team.