Coronavirus: Changes to insolvency law to help companies keep trading
Government to amend insolvency law to help companies keep trading
The government plans to amend the UK’s Insolvency Framework to add new restructuring tools including:
- 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; and;
- A new restructuring plan, binding creditors to that plan
The proposals will include key safeguards for creditors and suppliers to ensure they are paid while a solution is sought.
The government will also temporarily suspend the wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability should the company ultimately fall into insolvency.
Existing laws for fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against director misconduct.
More details will be published shortly.
UKFT is in constant dialogue with the government and is outlining the latest support available for businesses on our website. We will update the details as and when the situation changes.