EMERGENCY CHANGES TO INSOLVENCY LAW DURING CORONAVIRUS PANDEMIC
David Reade QC and Alexander Halban from Littletons examine the proposed changes and some of the issues which need to be worked out in the emergency legislation.
On Saturday 28 March 2020, the Government announced significant changes to UK insolvency law to help companies and directors weather the economic storm caused by the Coronavirus (COVID-19) pandemic.
As part of a range of measure to help companies, the Business Secretary, Alok Sharma, announced:
- There would be a new temporary moratorium for businesses undergoing a restructuring process, during which time they cannot be put into administration by creditors and will continue to be able to access supplies and raw materials.
- There would be a temporary suspension of wrongful trading laws for the duration of the pandemic, so that directors would not face the risk of personal liability in continuing to trade their companies. This would be made retrospective from 1 March. However, all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force
The Government said that the emergency legislation would be brought forward at the 'earliest opportunity' but it has not yet been published.
Published: 31/03/2020 14:12