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The UK Government is planning to introduce a number of major insolvency reforms through the Corporate Rescue and Insolvency Bill.
One of the key proposals is to limit the right to terminate following the insolvency of a party to the contract. This is a potentially major change and I will do a separate blog on this shortly.
In the meantime, there are some significant temporary provisions limiting the steps creditors can take which are designed to cushion debtors in the short term from anticipated economic effect of the COVID-19 pandemic. They are:
The bill may well be in force before the end of June and if so, any creditor owed money by companies struggling as a result of the pandemic will find their rights restricted (at least on a temporary basis). The clear policy line is that aggressive debt collection is off limits, at least until well into July, and a creditor who does proceed does so at their own risk.
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