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COVID-19: Insolvency Law Changes and Future Fund Criteria Expansion

Changes to the UK government’s Future Fund launch today – allowing more start-ups and innovative firms to apply for funding, and there have been major changes to the corporate insolvency process to give distressed businesses some breathing space.

Flexible furlough starts 1 July 2020. So far 9.3 million jobs have been furloughed through 1.1 million employers and the total value of claims made is £25.5billion. We have developed a comprehensive July flexible claims model and are now in a position to calculate an estimate of claims ahead of actually making any claim, so please talk to us if you have any queries.

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More Firms Can Now Benefit From The Future Fund

More start-ups and innovative firms will be able to apply for investment from the government’s Future Fund from 30 June:

  • companies which have participated in accelerator programmes now eligible for the popular scheme
  • more than 320 early-stage, high-growth firms have so far benefitted from £320 million of support through the Fund
  • this surpasses the £250 million initial funding made available by the government

Changes to the scheme’s eligibility criteria will mean that UK companies who have participated in highly selective accelerator programmes and were required, as part of that programme, to have parent companies outside of the UK will now be able to apply for investment.

To date, more than 320 companies have benefitted from £320 million of Future Fund support. Under the scheme, early-stage, high-growth businesses from a diverse range of sectors can apply for a convertible loan of between £125,000 and £5 million to help them through the Coronavirus outbreak.

See: https://www.gov.uk/government/news/more-firms-can-now-benefit-from-the-future-fund?utm_source=1e1bed60-9afb-47f4-8c28-26a1419d9a66&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

Major Changes To Insolvency Law Come Into Force

The Corporate Insolvency and Governance Act has received Royal Assent and came into force on 26 June 2020.

The Act is the largest change to the UK’s corporate insolvency regime in more than 20 years. It introduces new corporate restructuring tools and temporary easements to give distressed businesses the breathing space they need to get advice and seek a rescue.

One of its key provisions is the introduction of the new role of a Monitor to oversee the corporate moratorium it introduces – an extendable 20 working day period giving businesses protection from creditor action while they seek professional restructuring advice. A monitor must be a licenced insolvency practitioner and the Insolvency Service has provided guidance on their role and responsibilities. 

The Act also extends the suspension of termination clauses when a company enters into an insolvency procedure and introduces a new restructuring plan that has the ability to bind creditors to it.

The Act also provides temporary relief until 30 September 2020 from being subject to a winding up petition and from wrongful trading provisions where a business can demonstrate its difficulties arising from trading conditions arising from the COVID-19 pandemic. These easements are explained in more detail in a series of factsheets.

Changes to company filing and meeting requirements have also been introduced to relieve the burden on businesses during the pandemic and allow them to focus all their efforts on continuing to operate.

See: https://www.gov.uk/government/news/major-changes-to-insolvency-law-come-into-force?utm_source=d074743a-057c-4a03-b3ad-9c89496b1f5e&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate

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