The Corporate Insolvency and Governance Bill received royal assent on 25 June and is now an Act.
The second of the new measures is Ipso Facto (Termination) Clauses. When a company enters an insolvency or restructuring procedure, suppliers will often either stop or threaten to stop supplying the company. The supply contract often gives them the right to do this, but it can jeopardise any attempts to rescue the business. The Bill will mean suppliers will not be able to jeopardise a rescue in this way. The proposals include safeguards to ensure that continued supplies are pad for and suppliers can be relieved of the requirement to supply if it causes hardship to their business. There will also be a temporary exemption for small company suppliers during the emergency.
For more information on this or just for a chat, give us a call.