The press is reporting today that a fifth of small and medium-sized businesses in the UK are unlikely to have the cash they need to survive the next four weeks.
In light of the Covid-19 crisis, the government has announced it is fast-tracking changes to insolvency laws, to help companies that are currently struggling. These include:
1. Suspension of wrongful trading provisions for a period of three months, effective from 1 March 2020, with the ability to extend this if necessary. If this is implemented directors can allow their companies to continue to trade even if they know the company is insolvent.
2. Amendment of existing legislation to give UK companies breathing space and enable them to keep trading while they explore rescue options. Specifically:
a. A moratorium from creditor action whilst a rescue or restructuring is sought. This will mean if the moratorium is allowed no creditor will be able to take any formal action against a company whilst it seeks advice for a restructure or looks to be rescued.
b. Protection of suppliers to enable companies to continue trading during the moratorium
c. A new restructuring plan that would bind all creditors
If you or your business needs any legal advice relating to the proposed changes to the insolvency laws, please contact insolvency expert, Rob Moore, on (0114) 218 4051 or email: email@example.com