- 30th March 2020
- Posted by: Suzy Hill
- Category: Business News, COVID-19 NEWS
Covid-19: insolvency rules temporarily relaxed
The government has announced changes to the insolvency regulations during the coronavirus pandemic to enable UK companies undergoing a rescue or restructure process to continue trading, with the aim of giving them breathing space
This will also include enabling companies to continue buying essential supplies, such as energy, raw materials or broadband, while attempting a rescue, and temporarily suspending wrongful trading provisions retrospectively from 1 March 2020 for three months for company directors so they can keep their businesses going without the threat of personal liability.
Business Secretary Alok Sharma said:
“The government is doing everything in its power to save lives and protect livelihoods during these unprecedented times.”
“Applying a common-sense approach to regulation will ensure products are safe and reach the market without any unnecessary delay, getting vital protective equipment such as face masks to frontline staff as quickly as possible.”
“Today’s measures will also reduce the burden on business, giving bosses much-needed breathing space to keep their workers employed and their companies going.”
Matthew Fell, Chief UK Policy Director, Confederation of British Industry, said:
“The CBI welcomes these interventions at a critical time for business. The temporary suspension of wrongful trading provisions, along with other measures, will give much needed headroom for company directors to enable otherwise viable businesses to use the government’s support package and weather this crisis.”
The Business Secretary also announced that the government will introduce legislation to ensure those companies required by law to hold Annual General Meetings (AGMs) will be able to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus.
Companies will temporarily be extended greater flexibilities, including holding AGMs online or postponing the meetings.
This measure follows an earlier announcement that companies would automatically and immediately be granted a three-month extension to the filing of their accounts following a fast-track online process.
Over 10,000 businesses have already successfully applied for the extension.