Coming to the Rescue of Companies with flexible insolvency rules

The stark reality is that despite all the steps the Government are taking, unfortunately a number of companies will find themselves under severe difficulty and pressure over the forthcoming months.  The Government has acknowledged this and put several emergency measures in place.

The measures that have been announced will allow firms to continue trading, in circumstances where they would normally be expected to call in an Insolvency Practitioner and either liquidate the company or place it in Administration.

One of the most eye-catching measures is the suspension of wrongful trading rules. Prior to this announcement the Director of any company who traded while insolvent might have found himself personally liable to creditors.

This rule has been suspended, meaning that a Director of a distressed company can continue to trade without the threat of personal liability. It is thought that this should help a number of companies to trade and continue to exist beyond the current crisis, in circumstances where the company may well have failed.

A further, very practical, measure is that the rules in respect of annual general meetings have also been relaxed. Having a physical meeting with a number of people present is no longer an option. The Government have stated that these can either be adjourned, until after the crisis, or held by way of a video conference.

The CBI has warmly welcomed the recent measures stating, “The CBI welcomes these interventions at a critical time for business. The temporary suspension of wrongful trading provisions, along with other measures, will give much needed headroom for company Directors to enable otherwise viable businesses to use the Government’s support package and weather this crisis.”

Both measures are temporary, however will clearly give a measure of comfort to a number of company Directors.

Should you require any further information please contact Alex Lyttle on 01452 222433 or email him at








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