The government announced on 24 September 2020 that certain measures brought in to help protect businesses in response to the coronavirus pandemic are to be extended. The Business Minister, Lord Callanan, said “it is vital that we continue to deliver certainty to businesses through this challenging time, which is why we are now extending these important and necessary measures to protect companies from insolvency”.


The Corporate Insolvency and Governance Act 2020 (CIGA 2020) came into force on 26 June 2020, introducing several support mechanisms to help businesses struggling with the effects of the coronavirus pandemic. The measures brought in by the Act were due to expire on 30 September 2020.

On 24 September 2020, the government brought in the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020 S.I. 2020/1031 (the Regulations). This is a statutory instrument which enables extensions of time for particular measures brought in by CIGA 2020.

Temporary Modifications to the New Moratorium Procedure

The temporary modifications that the government brought in alongside the new moratorium procedure will now be available until 30 March 2021. These temporary modifications relax the entry requirements for use of this procedure. For example, companies can use the process even if they have been subject to an insolvency procedure in the last 12 months.

Termination Clauses

It is still the case that suppliers of goods are restricted from terminating a contract because the customer has entered into a relevant restructuring or insolvency process. This was a permanent measure brought in by CIGA 2020.

However, CIGA 2020 includes a temporary exemption for ‘small suppliers’, meaning they could terminate a contract in this circumstance. This exemption has been extended until 30 March 2021.

Statutory Demands and Winding-up Petitions

The restrictions on the presentation of statutory demands and winding-up petitions have been extended until the 31 December 2020. The government decided to extend these restrictions for a period of only three months, as opposed to six. This is because the government recognises that these restrictions are “a significant intervention into the normal working of insolvency law, in particular the rights of creditors”.

This means that:

1. Statutory demands on companies cannot be served between 1 March 2020 and 31 December 2020;

2. Winding-up petitions cannot be presented on the basis of a statutory demand that was served between 1 March 2020 and 31 December 2020; and

3. Winding-up petitions cannot be presented between 1 March 2020 and 31 December 2020 based on the company’s inability to pay its debts, unless the petitioner has reasonable grounds for believing that COVID-19 has not had a financial effect on the company.

Virtual Annual General Meetings

Companies will continue to have the flexibility to hold virtual annual general meetings until the 30 December 2020.

What has not been extended?

CIGA 2020 introduced the presumption in claims for wrongful trading against directors that “the person is not responsible for any worsening of the financial position of the company or its creditors that occurs during the relevant period”. This period for this presumption has not been extended under the Regulations and it will therefore expire on 30 September 2020.

Get in Touch

The effects of CIGA 2020 and the Regulations have brought about significant changes to insolvency law. If you need advice on how the CIGA 2020 provisions affect your company please get in touch with Farleys’ corporate insolvency team on 0845 287 0939 or contact us by email.