Corporate Insolvency and Governance Act 2020

15 Temporary exclusion for small suppliers: Great Britain

(1) Section 233B of the Insolvency Act 1986 does not apply in relation to a contract for the supply of goods or services to a company where—

(a) the company becomes subject to a relevant insolvency procedure during the relevant period, and

(b) the supplier is a small entity at the time the company becomes subject to the procedure.

(2) In subsection (1)(a) “relevant period” means the period which—

(a) begins with the day on which this section comes into force, and

(b) ends with 30 September 2020.

(3) For the purposes of subsection (1)(b), whether the supplier is a “small entity” at the time the company becomes subject to a relevant insolvency procedure (the “relevant time”) is to be determined under subsections (4) to (10).

(4) Where the supplier is not in its first financial year at the relevant time, the supplier is a small entity at the relevant time if at least two of the following conditions were met in relation to its most recent financial year—

• Condition 1: the supplier’s turnover was not more than £10.2 million;

• Condition 2: the supplier’s balance sheet total was not more than £5.1 million;

• Condition 3: the number of the supplier’s employees was not more than 50.

(5) For the purposes of Condition 1 in subsection (4), if the supplier’s most recent financial year was not 12 months, the maximum figure for turnover must be proportionately adjusted.

(6) For the purposes of Condition 2 in subsection (4), the supplier’s balance sheet total means the aggregate of the amounts shown as assets in the supplier’s balance sheet.

(7) For the purposes of Condition 3 in subsection (4), the number of the supplier’s employees means the average number of persons employed by the supplier in its most recent financial year, determined as follows—

(a) find for each month in that financial year the number of persons employed under contracts of service by the supplier in that month (whether throughout the month or not),

(b) add together the monthly totals, and

(c) divide by the number of months in the financial year.

(8) In subsections (4) to (7) the supplier’s “most recent financial year” is the financial year of the supplier which, at the relevant time, has ended most recently.

(9) Where the supplier is in its first financial year at the relevant time, the supplier is a small entity at the relevant time if at least two of the following conditions are met—

• Condition 1: the supplier’s average turnover for each complete month in the supplier’s first financial year is not more than £850,000;

• Condition 2: the aggregate of amounts which would be shown in a balance sheet of the supplier drawn up at the relevant time is not more than £5.1 million;

• Condition 3: the average number of persons employed by the supplier in the supplier’s first financial year (determined as specified in subsection (7)) is not more than 50.

(10) In this section—

• “entity” means—

  (a)

  a company,

  (b)

  a limited liability partnership,

  (c)

  any other association or body of persons, whether or not incorporated, and

  (d)

  an individual carrying on a trade or business;

• “relevant insolvency procedure” has the same meaning as in section 233B of the Insolvency Act 1986.

(11) This section has effect as if it were included in Part 6 of the Insolvency Act 1986.