EXPLANATORY NOTE
(This note is not part of the Regulations)
The Corporate Insolvency and Governance Act 2020 (c. 12) (“the 2020 Act”) makes provision for new measures designed to help UK companies avoid insolvency. These Regulations make provision relating to the application of those measures to limited liability partnerships (“LLPs”). They replace the Limited Liability Partnerships (Amendment etc.) Regulations 2020 which are revoked by this instrument.
The Limited Liability Partnerships Regulations 2001 (S.I. 2001/1090) (“the 2001 Regulations”) apply the provisions of the Insolvency Act 1986 (c. 45) (“the 1986 Act”) to LLPs registered in Great Britain. The Limited Liability Partnership Regulations (Northern Ireland) 2004 (S.I. 2004/307) (“the 2004 Regulations”) do likewise for LLPs registered in Northern Ireland, applying the Insolvency (Northern Ireland) Order 1989 (S.I. 1989/2405 (N.I.19)) (“the 1989 Order”). The provisions applied to LLPs by those enactments include new Part A1 of the 1986 Act and new Part 1A of the 1989 Order, which both were inserted by the 2020 Act and provide for a general moratorium which allows companies in financial distress a breathing space in which to explore rescue and restructuring options free from creditor action.
Regulation 3 introduces Schedule 1, which makes amendments to the modifications to the 1986 Act as it applies to LLPs contained in Schedule 3 to the 2001 Regulations. Schedule 1 inserts the appropriate modifications to Part A1 of the 1986 Act as it applies to LLPs and makes consequential amendments to other modifications contained in Schedule 3.
Regulation 4 introduces Schedule 2, which does the same for the 2004 Regulations and the 1989 Order.
The Limited Liability Partnerships (Application of Companies Act 2006) Regulations 2009 (S.I. 2009/1804) (“the 2009 Regulations”) apply certain provisions of the Companies Act 2006 (c. 46) (“the 2006 Act”) to LLPs.
Regulation 5 introduces Schedule 3, which makes amendments to the 2009 Regulations to apply new Part 26A of the 2006 Act to LLPs with appropriate modifications and makes consequential amendments following amendments made to the 2006 Act by the 2020 Act. Part 26A of the 2006 Act was inserted by the 2020 Act to allow struggling companies, or their creditors or members, to propose a new restructuring plan proposal between the company and its creditors and/or members.
Regulations 6 and 7 apply the temporary provision contained in Schedules 4 and 8 to the 2020 Act to LLPs. This provision makes temporary modifications to moratoriums in light of the Covid-19 pandemic.
No specific impact assessment has been prepared for this instrument as the effects of the relevant insolvency measures being applied to LLPs are covered by the impact assessment published alongside the Corporate and Insolvency Act 2020. An Explanatory Memorandum is published alongside this instrument on www.legislation.gov.uk.