COVID-19 insolvency measures extension, R3 response

24 March 2021

Insolvency and restructuring trade body R3 is urging directors of COVID-hit businesses to make the most of the time granted by the Government's extension of temporary insolvency measures to plan for the future.

The Government announced today (24 March) that it will extend a number of temporary measures brought in by the Corporate Insolvency and Governance (CIG) Act, which were due to expire on April 30, until the end of June.

R3 is calling on company directors to use this additional time to plan for when these measures and other Government support schemes end, and to seek advice about the options open to them to address their financial issues.

Duncan Swift, Immediate Past President of R3, said:

"The Government's decision to extend the CIG Act temporary insolvency measures will be a welcome boost for firms that are struggling as a result of the pandemic.

"It also provides directors of these firms with more time to plan for when these measures – and Government support initiatives like the furlough scheme – end, and we urge them to make the most of this.

"We've been through a period of unprecedented Government support, and directors need to plan for how they will manage when these measures are wound down – especially as it will take time for the business environment to return to how it was before the pandemic started.

"Now is the time for anyone with worries about their business finances to seek professional advice. Seeking this now rather than later typically provides more options to deal with challenges faced by the business, more time to decide which option is most suitable, and more time to implement the most appropriate solution."

About the extension of the temporary insolvency measures in the CIG Act

• Statutory demands and winding-up petitions will continue to be restricted until 30 June.
• Termination clauses are still prohibited, stopping suppliers from ceasing their supply or asking for additional payments while a company is going through a rescue process. Small suppliers will remain exempted from the obligation to supply until 30 June 2021.
• The modifications to the new moratorium procedure, which relax the entry requirements to it, will also be extended until 30 June 2021.
• The temporary moratorium rules will also be extended to the end of June.
• The suspension of the wrongful trading provisions for directors who can demonstrate that their company's trading has been negatively affected by the pandemic has been extended until 30 June. However, this does not provide a blanket suspension of the wrongful trading provisions, as directors may still be liable for losses in the periods before and after the pandemic hit their companies, and they may still be subject to action for other breaches of duties during the COVID-19 period.