The Business Secretary Alok Sharma has announced that he will make changes to enable UK companies undergoing a rescue or restructure process to continue trading, giving them breathing space that could help them avoid insolvency.
This will also include enabling companies to continue buying much-needed supplies, such as energy, raw materials or broadband, while attempting a rescue, and temporarily suspending wrongful trading provisions retrospectively from March 1 2020 for three months for company directors so they can keep their businesses going without the threat of personal liability.
Over 10,000 businesses have already applied for the extension.
Business Secretary Alok Sharma said: “The government is doing everything in its power to save lives and protect livelihoods during these unprecedented times. 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.”
Speaking about the reforms to insolvency law, 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.”
Commenting on Business Secretary Alok Sharma’s announcement on the relaxation of the insolvency rules, Business West Managing Director Phil Smith said: “Businesses will welcome the government’s sensible steps to amend insolvency laws to help protect companies weakened by the impact of coronavirus.
“It is right that the rules on wrongful trading are temporarily suspended to ensure that directors are not penalised for doing all they can to save companies and jobs during this turbulent period.
“Companies that were viable before the outbreak must be supported to ensure they can help power the recovery when the immediate crisis is over.
“Cashflow remains an urgent concern for many businesses, so it’s vital that government support packages reach businesses and people on the ground as soon as possible.”