A recent survey by the British Chamber of Commerce has suggested the majority of firms face a cash flow crisis. Therefore the new legislation introduced by the government to protect directors and insolvency due to coronavirus is a welcome move.
The new rules for directors and insolvency due to coronavirus
The government announced that the wrongful trading and insolvency rules are to be temporarily suspended. They have been backdated to take effect from 1 March 2020. There will be legislation introduced in Parliament at the earliest opportunity to implement these changes with the possibility of extending these rules if appropriate.
What are the existing rules?
Under the existing wrongful trading legislation the following applies:
The relaxation in the wrongful trading rules is designed to provide companies with a breathing space so that they can explore options for a rescue.
Should I close my company down?
It is highly likely that many businesses will suffer a decline in their turnover during the period of lock down enforced by the coronavirus pandemic. The government has offered far reaching supporting for businesses that have been impacted by coronavirus which includes the following:.
The relaxation of the wrongful trading rules will allow you time to consider these options. However if after exploring all of these opportunities you consider the business cannot continue we would recommend you seek the advice of a licensed insolvency practitioner.
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And if you'd like to know how we can help you with all of this, or with anything else, feel free to give us a call on 01202 048696 or email us at [email protected].