Government to introduce flexible insolvency rules to help businesses amid coronavirus crisis
Business Secretary Alok Sharma has said that there will be new measures to improve the insolvency system to help businesses hit by the coronavirus crisis.
Mr Sharma announced changes to insolvency rules to allow firms “greater flexibility as they face the current crisis”.
“It is crucial when the crisis passes, as it will, we are ready to bounce back,” he said, as he detailed measures to help businesses “emerge intact the other side of the Covid-19 pandemic”.
“These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends whilst ensuring creditors get the best return possible in the circumstances,” he continued.
The new rules will allow companies undergoing restructuring to continue access to supplies and raw materials.
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And, he said, there would be a temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability during the pandemic, which will apply retrospectively from March 1.
“However, to be clear, all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.”
Companies required to hold annual general meetings will be be able to do so flexibly in a matter compatible with public health guidance, Mr Sharma said.
“This might include postponing or holding the AGM online, or by phone using only proxy voting,” he said.
Mr Sharma said it was incumbent on businesses permitted to remain open during the shut down “to keep their employees safe”.
He said most businesses were adapting and, where necessary, issuing staff with personal protective equipment.
“If there are instances where organisations and businesses are not behaving appropriately in terms of their duty of care then of course there are organisations like the HSE (Health and Safety Executive) who should be informed.”
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