Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) Regulations 2020

Baroness Kramer Excerpts

Tuesday 27th October 2020 Grand Committee

[Baroness Kramer (LD) [V]]

My Lords, this statutory instrument could have been an opportunity to correct some of the flaws of the Corporate Insolvency and Governance Act. The most notable flaw is the scope for financial creditors to game a moratorium and suck out assets and cash through the lending terms applicable to new lending during the moratorium period. My colleagues and I were particularly keen to see protection for small creditors, who are likely to be the victims of such strategies by financial creditors. We also sought to move into the highest priority for repayment these same small creditors, who lack the deep pockets to cope with a deferral of payments due to them. The Government have sadly missed this opportunity to act and small creditors, usually small goods and services suppliers, are the losers.

The purpose of this SI is to extend measures in the Act related to Covid in order, as the Government say, to relieve pressure on businesses dealing with the virus. That makes sense to us; we do not object to the SI. The need for it comes as no surprise, as the impact of the virus on businesses is far more prolonged and deeper than the Government anticipated in some rather misplaced bravado of June and July. As business groups have indicated, the revised measures recently announced by the Chancellor are welcome but fall short. The combination of the virus, the likely loss for many of the Christmas market and economic Brexit, even with a deal, is so acute that we will sadly return to this matter many times.

On termination dates for measures under this SI and other places in the Act, it is very difficult for business to deal with the uncertainty of dates that keep moving. I wish that the Minister might agree to put pressure on his colleagues to get some good, solid forecasting from the OBR and a full appreciation of the economic difficulties and crisis that we face in order to put in place strategies that might have a rather longer life and do not require constant extension and revision. Although the measures can often be good in themselves, the uncertainty that surrounds them tends to undermine a great deal of their effectiveness, which I think we would all agree is a shame at a time like this.