Date30 Sep 2020
CategoryRestructuring & Insolvency
On 24 September, the Government extended the measures put in place by the Corporate Insolvency and Governance Act in order to continue to support and relieve pressure for businesses affected by Coronavirus.
A number of the measures in force under this emergency insolvency legislation were due to expire on 30 September 2020 and have now been extended to the end of December 2020 and in some cases to March 2021.
The temporary measures include:
A key measure of the Corporate Insolvency and Governance Act that will not be extended beyond the 30 September 2020 is the relaxation of Wrongful Trading provisions against company Directors.
The lack of extended protection from wrongful trading is a clear message from government that company directors now need to be confident that they have good plan in place for a viable business if they choose to continue to trade, regardless of the many uncertainties business continue to face. Directors are at risk of being found to be personally accountable should it be found that continued trading worsens the position for creditors when they should have known that business failure was inevitable. It is also a clear statement of intent that the government will do all it can to recover CBILs or BBLs monies paid to companies which the directors knew (or ought to have known) were trading insolvently. It comes on the back of a recent government reminder to Insolvency Practitioners that they need to look closely at what the directors of a company knew at the time of taking out a government backed business loan and how they have deployed the funds.
The Government’s full announcement can be found here.