As noted in our previous Perspectives Article, in March 2020, the UK Government announced the suspension of the wrongful trading provisions contained in s.214 of the Insolvency Act 1986.
Has COVID-19 encouraged you to reconsider your outsourcing needs? If so, it might be time to quarantine your outsourcing agreements and give them a health check. Below we have tracked-and-traced a list of considerations to help you to isolate any potential areas in those agreements that may need sanitising.
Earlier this year the UK Government introduced a number of temporary measures intended to avoid large scale insolvencies across the country. One of these measures was the suspension of wrongful trading liability.
This suspension was in place until September 30, 2020. Most of the other temporary measures were extended (e.g. the effective suspension of winding up petitions by creditors has been extended until December 31, 2020) but the suspension of wrongful trading liability was not extended.
Alongside the permanent reforms to English insolvency law introduced by the Corporate Insolvency and Governance Act 2020, the government introduced a temporary suspension of certain provisions of the Insolvency Act 1986 (the IA) to address the economic turbulence caused by the COVID-19 pandemic.
If in your position as director you allow your company to operate while insolvent and unable to pay debts, you could be liable to serious penalties.
The Australian Securities and Investments Commission (ASIC) outlines key considerations for directors whose companies are in financial difficulty or are insolvent.
Am I a director?
NOVEMBER 2020 Corona: directors’ duties and restructuring options in the BeNeLuCh Corona: directors’ duties and restructuring options in the BeNeLuCh I Introduction The rapid spread of the coronavirus (COVID-19) pandemic is leading to far-reaching health and safety measures all around the world. For people at home, but also for businesses, this creates a situation of great uncertainty. Certain governments have taken (extensive) measures to help businesses and its employees.
Tony Heaver-Wren and David Bulley, Appleby
This is an extract from the second edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Introduction
The UK Government has reintroduced the temporary suspension of wrongful trading measures from 26 November 2020 until 30 April 2021 pursuant to The Corporate Insolvency and Governance Act 2020 (Coronavirus) (Suspension of Liability for Wrongful Trading and Extension of the Relevant Period) Regulations. The suspension was originally introduced in March 2020 under section 12 of the Corporate Insolvency and Governance Act 2020 and expired on 30 September 2020.
Company directors have a number of duties imposed on them under the Companies Act 2006 as well as under common and other laws. Failure to carry out directors’ duties can result in substantial penalties, including personal liability for any losses suffered by the company, its shareholders and its creditors.