The government has announced new insolvency measures to protect businesses and “help them emerge intact” from the coronavirus crisis.
Alok Sharma, the UK business secretary, announced changes including new rules to make sure “companies undergoing restructuring can continue to get hold of suppliers and raw materials”.
He also said the wrongful trading law would be suspended to protect directors during the coronavirus pandemic - a provision which will have retrospective effect from 1 March.
However, ”all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force”.
Introduced into UK insolvency law in 1986, wrongful trading makes it an offence for a company director to continue trading if they are in the knowledge that the business is unable to avoid liquidation.
Speaking at the daily Downing Street press conference on Saturday, Sharma said the measures ”are designed to give businesses great flexibility as they face the current crisis”.
”Our overriding objective is to help UK companies, which need to undergo a financial rescue or restructuring process, to keep trading. These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends, whilst ensuring that the creditors get the best return possible in the circumstances,” he added.
Companies have also been granted flexibility around the requirement to hold annual general meetings, to meet public health guidelines. Options now include postponing the AGM, or holding it online or by phone using only proxy voting.
”Britain is meeting the challenge. Working together in a joint endeavour to get through this pandemic,” said Sharma. ”Be in no doubt, the government will continue to fight tooth and nail to protect lives and livelihoods everywhere in this country.”
The government announced over the weekend that social distancing measures could last for as long as six months.