The Corporate Insolvency and Governance Act 2020 (CIGA) included both temporary and permanent measures designed to assist viable businesses in financial difficulty. The temporary measures, ostensibly brought in to help businesses during Covid, have long since fallen away but the permanent measures (company moratorium, suspension of termination (ipso facto) clauses and restructuring plans) look like they're here to stay, particularly following the recent publication of CIGA's post-implementation review (the Review). 

Each of the three measures in their own way are designed to provide struggling businesses with some leeway in which to consider their options and, potentially, be rescued, with the Review concluding that the measures have been broadly welcomed by stakeholders and assist the UK to retain its reputation as a world-leading insolvency regime. 

The company moratorium measure prevents creditors taking any legal or enforcement action against a company in financial difficulty for at least 20 business days, thereby giving companies some "breathing space" to consider their options, obtain advice and negotiate with creditors. Although having been used successfully on a number of occasions since its implementation, the Review points out that the measure does not apply to "financial contracts"; an exclusion which is not particularly helpful to SMEs where, often, their only creditor is the bank. Moratoriums are also not an option for larger companies (i.e. those with a capital market debt above £10m) for whom the measure is excluded. 

The suspension of termination clauses measure provides that suppliers may not exercise termination rights against a customer where an insolvency event has occurred or during an insolvency period. Intended to prevent suppliers from holding companies "hostage" by withdrawing supply or demanding "ransom" payments, the Review concludes that the early signs from this measure are promising although accedes that it's probably too early to say definitively whether the measure has been successful. Insolvency practitioners have been supportive of the measure as it requires an engagement between supplier and company at the very start of the process and although passing the risk to suppliers, the availability of a "hardship" provision for those suppliers who can't continue to supply alleviates this to some extent. That said, the Review did make clear that not all suppliers are yet aware of this protection, but that this will hopefully improve as time goes on.   

According to the Review, the final measure, restructuring plans, is the strongest of the three measures in meeting policy objectives. Enabling companies to put in place a company rescue which has the support of most (not all) of the creditors, this measure enables viable companies to be rescued despite a minority non-supportive creditor, provided that such non-supportive creditor would not be placed in a worse position following the rescue. Concern was raised in respect of the cost to creditors of challenging restructuring plan proposals which may prohibit them from doing so but the Review also concluded that the courts are alive to the protection of dissenting creditors' interests. 

Various potential amendments were proposed in the Review, in particular to rectify the issues mentioned above, although it was made clear that these are simply suggestions rather than a firm commitment to put them in place. Given that many of the suggestions would require amendments to the primary legislation, it will be some time before any of these take effect (and that's assuming the government decides to action any) and so for now, businesses, insolvency practitioners and suppliers would do well to apprise themselves of the measures well in advance of when they might be needed.