At the government’s latest daily coronavirus media briefing from Downing Street, business secretary, Alok Sharma announced a series of new measures to help protect businesses facing insolvency due to coronavirus.
Insolvency laws will change to allow firms greater flexibility and ‘extra time to weather the storm’ as it ‘is crucial that when the crisis passes, as it will, we are ready to bounce back.’
The new rules will allow companies undergoing restructuring processes to maintain access to supplies and raw materials. A temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability during the pandemic will also be implemented, applying retrospectively from March 1. In addition, companies which are required to hold annual general meetings are able to do so in a more flexible manner, be it online, by phone using only proxy voting or having it postponed, to be compatible with public health guidance.
The measures aim to improve the insolvency system which provides the legal options for companies running into major difficulties.
‘’Our overriding objective is to help UK companies which need to undergo a financial rescue or restructuring process to keep trading.’’
All other checks and balances that help to ensure directors fulfil their duties properly will remain in force. Creditors are still ensured that they will be getting the best return possible.
The legislation is thought to be brought forward at the earliest opportunity.