Talks underway with ministers about extending insolvency measures

20 September 2020

This weekend we hear the news that ministers are discussing extending the temporary ban which has been put on statutory demands being used as the basis for winding up petitions, in place since late April.

It is thought that by doing this, many company insolvencies will be prevented.

The temporary ban which was implemented as a measure of the new Corporate Insolvency and Governance Act, is set to end at the end of the month, meaning officials will have to make a decision within a matter of days.

The extension is not yet confirmed but is appearing very much likely.

As well as a ban on statutory demands, the moratorium on directors’ liability for wrongful trading also expires at the end of September. It is thought this is being discussed too about a possible extension.

What will the outcome be?

‘’Without [the extension to] these measures, we could see some entirely preventable company collapses, putting our economic recovery and jobs at risk’’, said Roger Barker, the Institute of Directors, director of policy and corporate governance.

‘’Directors must be in a position to see their organisations through the crisis, they shouldn’t be penalised for acting responsibly amid unprecedented circumstances’’.

Sky News reported on the topic.

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