On 26 June 2020 the Corporate Insolvency and Governance Act 2020 (the Act) came into force, introducing a number of permanent reforms to English insolvency and restructuring law. Among these reforms is a restriction on the effectiveness of certain termination clauses in contracts for the supply of goods and services where a counterparty enters an insolvency procedure.
The Restriction on Ipso Facto Clauses
Under the Act, clauses that allow termination of an agreement for insolvency-related reasons (so called ipso facto clauses) will no longer be enforceable in contracts relating to the supply of goods and/or services. This restriction, which applies retroactively, also applies to clauses that provide for “any other thing” (i.e. any othe…
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