Covid-19 Changes to insolvency rules to help businesses confirmed
The Business Secretary, Alok Sharma, has announced new insolvency measures to help businesses hit by the coronavirus crisis.
Significantly, there is an initial three-month suspension of the wrongful trading rules in order to remove the threat of directors incurring personal liability whilst trading during the pandemic.
The legislation passed through Parliament does say that “all other “checks and balances” that help to ensure directors fulfil their legal duties properly will remain in force.”
Other new measures announced include allowing companies to continue to access essential supplies (such as raw materials, component parts, energy etc) while attempting to rescue the business.
Companies undergoing a restructuring process will also be given a time limited moratorium or breathing space from creditor action.
The aim is for directors to keep their businesses trading during the pandemic, paying their staff and suppliers, even if there are insolvency fears, without the threat of incurring personal liability.
Speaking at a Downing Street press conference, Alok Sharma said he hoped the measures would give firms “greater flexibility” and the extra time and space they need to “weather the storm” and “emerge intact the other side” of the pandemic.
Use the link below to download the official House of Commons briefing paper on the changes announced.