The official name for the new legislation is The Corporate Insolvency And Governance Act 2020. Most of the new measures will be temporary and some of them will be retrospective, meaning they could help companies that got into financial difficulties before the bill comes into law. You can read an overview of the bill here.
The main aim of the bill is to help companies get through the unusual circumstances caused by COVID-19. Many of the financial issues faced by companies could be summed up as temporary cashflow problems. Under ordinary circumstances, this would probably lead to a company being legally insolvent and most certainly mean their suppliers would stop supplying them. The new bill aims to provide companies with a temporary breathing space so they can ‘get things sorted’. There are useful factsheets available on the Government’s website with an individual sheet relating to each new measure, with examples of how this might affect you. Whilst these illustrations are informative, they obviously won’t cover your company’s exact circumstances.
That is where we can help you. Here is a list of each new measure, along with a link to the Government factsheet.
Suspension Of Wrongful Trading Liability. Relaxation of some of the rules against directors continuing to trade even though their company is technically insolvent because of short term COVID-19 problems. Click here for details.
Prohibition Of termination Causes. Help to persuade your suppliers continue to supply your company, even if your company is undergoing a formal restructuring process. Click here for details.
Moratorium. If, because of COVID-19, your company has cashflow problems, this could give you breathing space to restructure or refinance the business. It stops suppliers, landlords and other people owed money by your company from taking legal action against the company without the permission of a court. Click here for details.
Restructuring Plan. New rules to stop one type of creditor preventing the restructuring of your company to help it survive the current tough trading conditions. Click here for details.
Statutory Demands And Winding-Up Notices. Suspension of most winding up petitions and orders until 30 September 2020. Click here for details.
Annual General Meetings And Other General Meetings. Relaxation of rules regarding annual general and similar meetings, allowing them to be postponed or undertaken by video conferencing. Click here for details.
Companies House Filings. Greater flexibility for due dates on fillings to Companies House. Click here for details.
We can explain how all the new rules could help you and your company. Our initial advice is free. We like to think it’s friendly and talking to us won’t put you under any obligation. We are certain you’ll come away from the conversation feeling better informed and more able to make important decisions.