Given the many fast-paced UK government announcements of COVID-19-related measures, this Client Alert provides a summary, as of 28 March 2020, of the proposed changes to UK insolvency laws.
As of 28 March 2020, the UK government announced a number of reforms to UK insolvency laws...
..Temporary suspension of existing wrongful trading rules, in respect of directors’ actions for three months beginning from 1 March 2020. This suspension is intended to ensure that directors in this uncertain COVID-19 environment are able to take decisions to continue to trade and incur new credit — including under the government funding initiatives — decisions which may otherwise cause directors concern about the potential for personal liability under the wrongful trading regime set out in sections 214 and 246ZB of the Insolvency Act 1986 (IA86). A summary of existing wrongful trading rules is set out below for completeness. The authors will update this note as and when the legislation is published giving further clarity on the scope of such relaxation.
..Likely the same wrongful trading suspension legislation will include the implementation of plans to amend the insolvency regime and to introduce new insolvency restructuring regime procedures, which were previously announced in August 2018. The objective of the proposed changes is to further enhance the “rescue culture” for businesses in the UK and, in a single piece of legislation, to allow potentially strong businesses to survive and hopefully thrive — similar to the US and its Chapter 11 process.
Please see full publication below for more information.
