While we await further detailed guidance to be issued we provide a basic summary as follows:
The UK’s Insolvency Framework will add new restructuring tools including:
The proposals will include key safeguards for creditors and suppliers to ensure they are paid while a solution is sought.
The government will also temporarily suspend the wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability should the company ultimately fall into insolvency.
Existing laws for fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against director misconduct.
Jennifer Marshall, president of the Insolvency Lawyers Association and chair of the City of London Law Society Insolvency Sub-Committee said: "We welcome and support these proposals. Suspending wrongful trading, in particular, will assist directors in accessing Government or bank funding without concerns regarding personal liability. The insolvency profession in the UK is hugely talented and these reforms, together with existing rescue tools such as administration, could really assist in saving livelihoods".