As part of its toolkit to improve rescue opportunities for financially-distressed companies, the Government has announced that:

"Companies will be supported through a rescue process by the introduction of new rules to prevent suppliers terminating contracts solely by virtue of a company entering an insolvency process."

The right to terminate contracts on this basis is already restricted for supplies of essential utilities and IT services. However, this only affects quite a narrow range of suppliers.

At present, other suppliers to English companies are generally still free to rely upon clauses which allow them to terminate when their customer becomes insolvent. We may well shortly see this change.      

You can read both the Government's original press release here and our longer bulletin on this topic here.