Insolvency Measures Extended for Struggling Businesses

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Insolvency Measures Extended for Struggling Businesses

Several insolvency measures have been extended in response to the ongoing COVID-19 pandemic.

The government have confirmed that the temporary removal of the threat of personal liability for wrongful trading from directors will continue until 30th April 2021.

This comes alongside announcements that companies and other qualifying parties with obligations to hold annual general meetings (AGMs) will still be able to hold these virtually until 31st March 2021. This will mean that company shareholders will still be able to vote on important issues and examine company papers remotely.

These measures were initially put in place earlier this year, in a bid to protect businesses from insolvency in the wake of the ongoing COVID-19 pandemic.

Commenting on the scheme, Business Minister Lord Callanan had this to say:

“It is vital that we continue to deliver certainty to businesses through this challenging time, which is why we are now extending these important and necessary measures to protect companies from insolvency.

Through this measure, we want to ensure businesses are able to not only come through this testing period, but also to plan, adapt and build back better.”

What changes have been made?

Here’s a summary of the changes made to the Corporate Insolvency and Governance Act:

  • Companies will be able to hold AGMs virtually until April 2021
  • Statutory demands and winding-up petitions will be restricted until 31st December 2020, protecting businesses from creditor enforcement action as a result of debts related to the pandemic
  • Entry requirements to the new moratorium procedure have been relaxed, meaning a business that has been subject to an insolvency procedure in the last year may enter
  • Businesses are protected from eviction until the end of the year, protecting businesses struggling to pay their rent because of coronavirus

You can read the full update on the website.

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