IoD Calls for Emergency Insolvency Measures to Avert Company Collapses

The IoD is calling for emergency insolvency measures to prevent widespread company collapses, Business News Wales reported. Under current laws, the board of directors has a strict duty to cease trading if the company is facing insolvency, and may face personal financial or legal liabilities at a later date if they seek finance instead of doing so. The IoD therefore calls on the Government to relax existing insolvency obligations – including a moratorium on the current offence of wrongful trading. Under the Insolvency Act 1986, the board of directors has a strict duty to announce a cessation of trading if the company is insolvent – or if insolvency cannot realistically be avoided in the near future. The company must then be placed into an insolvency procedure – such as administration or liquidation – in order to safeguard the interests of the company’s creditors. Read more