On 28 March 2020, the Business Secretary Alok Sharma announced changes to the insolvency legislation.
The objective is said to be to allow companies greater flexibility in the current situations created by the COVID-19 (Coronavirus) outbreak, so they can emerge intact when the crisis has ended.
The full details of the measures are not yet known but will consist of:
- A temporary suspension of wrongful trading, as set out within section 214 of the Insolvency Act 1986, to apply retrospectively from 1 March 2020. Under this law, in certain circumstances, company directors can be held personally liable for trading a company whilst it is insolvent.
- New rules to allow companies undergoing restructuring to continue to get access to supplies and raw materials.
Mr Sharma stated that “These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends, whilst ensuring creditors get the best return possible in the circumstances.”
It will be interesting to see both the further details and the extent of the impact such changes will have.
For help and advice on insolvency issues, please contact experienced dual-qualified licenced Insolvency Practitioner solicitors, Nicky Calthrop-Owen and Annabel Whittaker.
Posted on March 30, 2020
