As a result of the current situation, we are advising clients who find themselves operating in the shadow of potential bankruptcies along the supply chain, in their customer base and their trading partners globally. Based on deep workout experience after past world crises, we can help clients to find and employ business strategies to minimize business disruption, salvage relationships and restructure financial facilities and business structures to facilitate ongoing trading .
Issues arising:
On 28 March, UK Business Secretary Alok Sharma announced that the rules relating to ‘wrongful trading’ will be suspended on account of the issues that Coronavirus Disease 2019 (COVID-19) presents.
On Saturday 28 March 2020, the Business Secretary, Alok Sharma, announced two measures to help charities during the coronavirus (COVID-19) outbreak. Both measures are primarily relevant to charitable companies
We await further details of both proposals.
These are:
Directors have a duty to act in the best interests of the company. A director has the following general duties under the Companies Act 2006:
In this week’s update: Guidance on virtual board and committee meetings, updates and guidance on AGMs, pre-emption principles are relaxed and a few other items.
This week, in coronavirus-related news
Following the outbreak of a global pandemic unprecedented in recent memory, the UK is now reeling from the devastating effects of the coronavirus. Small and medium-sized businesses throughout the nation will already have been forced to come to terms with this new reality, through a combination of staff illness, forced closures, supply chain disruption and loss of business.
The Coronavirus Act 2020 is now in force and Section 82 of that Act effecting the postponement of the landlord’s right to forfeit for non-payment of rent is causing consternation amongst both landlords and tenants as they seek to navigate through these uncertain times.
On 28 March, 2020, the UK Government announced that it intends to amend insolvency law to give companies breathing space and allow them to keep trading while they explore options for rescue. The changes include (a) a temporary suspension of wrongful trading by directors of UK companies for three months commencing on 1 March, 2020 and (b) the in troduction of a moratorium for companies in financial difficulty preventing creditors enforcing debts for a period of time. Full details of the proposed changes are yet to be published.
Wrongful Trading
Despite what seemed like three months ago to be something only happening a very long way away, and would hopefully dissipate as quickly as it started, the Coronavirus pandemic has well and truly arrived on our shores.
Daily news reports are revealing the far-reaching effects of the outbreak, the likes of which have not been seen for generations. In what form, and to what extent, the health, financial and social implications will be in the aftermath of the pandemic remain an unknown quantity for us all.
Given the material impact that coronavirus is having on businesses, on March 28, 2020 the government announced that legislation would be forthcoming amending UK insolvency laws to: