When is a director a director? At first glance this may appear to be a facile question. Why would individuals who only carry the title “director” fall within this group? Surely a director must be someone who has been formally appointed as a director?
Well, yes and no. For instance, someone who is involved in the day to day management of a business, but has not been formally appointed as a director or someone who tells the board what to do may also be considered to be a director for the purposes of company law.
This client alert summarises the recent announcement by the UK government concerning reforms to UK insolvency law to help struggling businesses, being:
Since the beginning of March, the UK has seen various high profile company failures as a result (at least in part) of COVID-19. Flybe and Laura Ashley may be the first of many businesses unable to react and adapt to the unprecedented challenges.
The Chancellor has committed to doing “whatever it takes” to save businesses and workers and, as part of a raft of measures, has pledged to pay 80% of staff kept on by employers.
The ILA Technical Committee, in conjunction with the CLLS, has produced the attached briefing note that reminds practitioners and businesses of the flexibility of a UK administration to stabilise, protect, and, if necessary, restructure companies.
As a direct result of the restrictions imposed by the Government on us all in response to the COVID-19 pandemic, many companies have suddenly and unexpectedly found themselves in a position where they are unable to pay their suppliers and are therefore insolvent on a cash flow basis.
- Talk to your contracting partners about any difficulties that have arisen or that you anticipate might arise. Everyone knows that unanticipated issues are going to get in the way of normal business. So address them head on. Pretending that they don't exist isn't going to be of any help to you or your business partners.
- If you are struggling financially take advantage of the government support. Our website provides guidance on how to access that support. Speak to your bank. The risk to banks is significantly mitigated by the government guarantee.
There have been increasing concerns in recent weeks that UK insolvency law does not accommodate the short-term impact of COVID-19 on many businesses. In response, the Business Secretary announced on 28 March that the UK's insolvency rules would be amended as part of the Government's wider business support package. Whilst the measures that the Government intends to implement have not yet been fully detailed, this note summarises what has been announced so far and what we might expect, based on the Business Secretary's comments.
Last week, the Government announced a number of measures to provide financial support to businesses struggling with the impact of COVID-19, including two new Government-backed funding schemes.
Addleshaw Goddard is monitoring those measures closely, with our latest updates found here.
Notwithstanding, it is inevitable that we will see more companies collapse over the coming months, as they struggle to cope with the indefinite business disruption.
This article does not provide legal advice nor should it be relied upon by anyone receiving it for the purpose of making decisions in relation to their business or otherwise. This article sets out some general concepts which may be relevant for business owners and managers to consider bearing in mind the current uncertain financial landscape.
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