Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020

(Limited Text - Ministerial Extracts only)

Monday 11th January 2021 General Committees

[The Chair]

I remind hon. Members to observe social distancing and sit only in places that are clearly marked. Hansard colleagues would be most grateful if Members sent speaking notes by email to [e-mail].

[The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Amanda Solloway)]

I beg to move,

That the Committee has considered the Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020 (S.I. 2020, No. 1483).

It is a pleasure to serve under your chairmanship, Ms Rees, and to cover this debate on behalf of the Under-Secretary of State for Small Business, Consumers and Labour Markets, my hon. Friend the Member for Sutton and Cheam (Paul Scully). I well understand the importance and impact of insolvency regulation. The regulations were laid before the House on 9 December 2020.

Since the emergence of covid-19, the Government have been swift to act, providing support to businesses affected by its impact on health, to give them every chance to survive and get through this period of uncertainty. Since March, businesses have benefited from a package of Government support targeted at saving jobs and livelihoods, such as the furlough and job retention schemes, as well as billions of pounds in loans, rates relief, tax deferrals and grants.

Today, all areas of Great Britain are again subject to restrictions put in place to limit the spread of the virus and to help save lives. Those restrictions are crucial to stop our NHS being overwhelmed while we wait for everybody to be vaccinated, but the adverse effects that these essential measures continue to have on many businesses, particularly those in the retail and hospitality sectors, have been well documented. Once again, the Government have been quick to react to the recent announcement of further national restrictions, with a new £4.6 billion package of lockdown grants to support businesses and protect jobs in the retail, leisure and hospitality sectors, which have been hit particularly hard.

The regulations will continue to help companies by extending to 31 March 2021 the temporary suspension on issuing statutory demands and the restrictions on company winding-up petitions. These measures, which were first introduced by the Corporate Insolvency and Governance Act 2020, were extended by earlier regulations from the end of September 2020 to 31 December; the present regulations extend them further.

Since they were introduced last March, the measures have helped to protect many viable companies from aggressive creditor enforcement during these difficult trading times. The temporary restriction on company winding-up petitions means that a petitioner must satisfy a court that any debts are not covid-19 related. The extension will further help to support companies while national restrictions continue to affect the trading capability of many of our businesses. Although these measures are intended to help companies that may be subject to aggressive creditor enforcement, the Government have been clear that they are not to be seen as a payment holiday; where companies can pay their debts, they should do so.

In addition to the protection that the measures give, they are also intended to give companies with unavoidable accrued arrears that have been caused by the pandemic time to take advice from restructuring professionals and to negotiate and reach agreements with their creditors wherever possible. I know that many companies have done so successfully, and I am grateful to them; I urge others to do so and to plan for the post-covid future with confidence.

I know that many businesses and their business representatives will welcome the continued support that the regulations will give them during these really very uncertain times, but I also recognise that these measures will mean a further period of uncertainty for creditors, in which their rights to enforce recovery of their debts will be temporarily suspended. We do not take this action lightly, and we will review carefully before taking any further decisions when the extension expires at the end of March. I commend the regulations to the Committee.

--- Later in debate ---

[Amanda Solloway]

I thank the hon. Member for Southampton, Test for his contribution and his support for the legislation. The points raised highlighted the importance of the measures being extended by the regulations, and the necessity of extending them again so that businesses can continue to benefit from them. As I mentioned in my opening remarks, this Government have given unprecedented support.

In response to the hon. Gentleman’s question about the cliff edge, since the emergence of covid-19, businesses have received billions in loans, tax deferrals, business rate relief and grants to support them and help save jobs, and the recently announced package of targeted measures to provide ongoing essential support as social restrictions are reintroduced in many regions.

Since March last year, businesses have continued to face an exceptionally challenging time, none of which could have been predicted. They have been unable to trade, or their ability to trade at full capacity has been restricted due to social distancing measures. The regulations will provide the much-needed continued support for businesses to concentrate their best efforts on continuing to trade and build on the foundations of our economic recovery. I sincerely hope that companies and their creditors will come together in good faith to maintain the future trading relationships and secure the benefits to both themselves and the economy as a whole.

I thank the hon. Gentleman again for his valuable contribution to the debate, and I commend the regulations to the Committee.

Question put and agreed to.