On Saturday 28 March, the UK government announced two important changes to Insolvency laws designed to support businesses during the Coronavirus.
Firstly, they will enact new restructuring plans and moratorium to enable companies to continue to trade within the UK’s Insolvency Framework. The changes are based on plans previously announced in August 2018 and include:
- A temporary moratorium for companies going through a restructure to give them breathing space from creditors and ensure they cannot be put into administration
- The ability to continue to buy supplies while going through a restructure
- The ability to hold stakeholders to a new restructuring plan
Wrongful trading laws
Secondly, wrongful trading laws are being temporarily suspended to protect company directors. The wrongful trading laws normally makes it an offence for a company director to continue to trade if they know the business is unable to avoid going into liquidation. However the suspension, which is being applied retrospectively from 1 March for 3 months, is to prevent businesses who are unable to pay debts due to the Coronavirus from being forced to file for bankruptcy. It is hoped it will give company directors the ability to continue to do business during the Coronavirus, without the threat of being personally liable should the company later become insolvent.
For advice with changes affecting your business due to the Coronavirus, please contact us by email or by phone.
Visit our dedicated Coronavirus Hub for more information on the latest financial support for businesses and individuals announced by the UK Government.