It is typical of commercial contracts to see the right of a supplier to terminate the contract (or suspend its delivery obligations) when the customer is subject to insolvency proceedings (such as administration or liquidation) and English law has hesitated in the past to encroach on the contractual freedom of both parties, as they wish. The new rules ensure that deliveries are not interrupted when a business is subject to insolvency proceedings, because a supplier refuses to deliver, terminates the contract or makes other adverse changes to the conditions under which it is prepared to continue delivering. Clauses of a different value in a contract are essentially rendered ineffective, and this applies to existing contracts that are already in force, and not only to new ones. The new law expressly authorizes a supplier, with the agreement of the designated holder (z.B.B. qualified receiver) or with the authorization of the Tribunal, on the ground that the continuation of the contract would result in harshness for the supplier. Suppliers must now continue to supply insolvent business customers on an ongoing basis, as the right of termination is virtually zero in the event of insolvency. This will have a huge impact on commercial contracts and supply chains. In the current economic context, this will have a particularly large impact on sectors such as manufacturing and aerospace, where supply chains are often critical to the operation of a business. The right of receivers to opt for non-compliance with existing contracts applies to reciprocal contracts, but not to unilateral contracts. Until 30 September 27, 2020, the prohibitions will not apply in England and Wales and Scotland if the contractor is a “small unit” at the time the employer is subject to insolvency proceedings. The corresponding thresholds are set in the legislation and concern the contractor`s turnover, the total assets and the average number of employees.

Suppliers often terminate a company`s supply or threaten to suspend supply initiated in insolvency or restructuring proceedings. They do this to gain leverage to obtain payment of previous debts and can sometimes effectively circumvent the legal “cascade” of payments in the event of insolvency. Agreements or clauses that exclude or limit in advance the applicability of the law of receivers are therefore legally inoperative. . . .