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