On Saturday, 28 March 2020 at the No 10, Downing Street daily Covid – 19 Health Crisis media briefing, Alok Sharma, Secretary of State for Business, Energy and Industrial Strategy, announced that the Government will bring into law in “the coming weeks” changes to the UK insolvency laws to help struggling British businesses stay afloat and give them “greater flexibility” during the coronavirus pandemic and emerge intact the other side of it.
He said that the measures will give firms extra time and space to weather the storm and be ready to get back to normal when the crisis ends whilst ensuring creditors get the best return possible in the circumstances. He also said that that the changes will allow companies undergoing restructuring to continue access to supplies and raw materials to carry out their activities.
Mr Sharma also announced that there would be a temporary suspension of the wrongful trading provisions “for three months” to be applied retrospectively from March 1 2020 for company directors to remove the threat of personal liability during the pandemic, but he was keen to emphasise that all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.
The Insolvency Service have, over the weekend, issued further information on the Government’s proposed changes. They include:-
- A moratorium for companies giving them breathing space from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure.
- Protection of their supplies to enable them to continue trading during the moratorium.
- A new restructuring plan or procedure, binding creditors to that plan.
As soon as we have more information, we shall let you know.