Wrongful trading suspension 're activated' by UK Government leaving directors with a 2-month

Dentons

Today, new legislation comes into force* that provides directors of companies in financial difficulty with a second breathing space from the financial impact of the wrongful trading provisions.

Previously not extended alongside the other temporary insolvency provisions back in September 2020 (because of a technicality with dates apparently) and left to expire, the UK government has now renewed the suspension of wrongful trading liability for directors, originally in place from 1 March 2020 to 30 September 2020 by creating a second suspension of this liability to apply between 26 November 2020 and 30 April 2021 (but with no retrospective effect). 

In deciding whether a director should make a financial contribution to the assets of a company in financial difficulty, a court would need to consider only behaviour before 1 March 2020 and between 1 October 2020 and 25 November 2020 as potentially objectionable.   

The new legislation also further extends the temporary modifications to the processes of corporate meetings until 30 March 2021.

*The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations 2020

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dentons | Attorney Advertising

Written by:

Dentons
Contact
more
less

Dentons on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.