Proposed changes to UK insolvency laws aim to support companies under pressure due to COVID-19.
On 28 March 2020, the UK government announced a number of reforms to UK insolvency laws:
- The temporary suspension of existing wrongful trading rules retrospectively from 1 March 2020 for three months, so that directors can continue to trade without the threat of personal liability.
- The implementation of plans to amend the insolvency regime and to introduce new insolvency restructuring regime procedures, which were previously announced in August 2018. The changes will include a new standalone moratorium, protection of companies’ supplies to enable them to continue trading during the moratorium, and a new restructuring plan.
Legislation to introduce these changes will be introduced in Parliament at the earliest opportunity, and provisions will be included to allow the changes to be extended if necessary.
For a full briefing exploring this topic in more detail, please see Latham’s Client Alert.