UK to change Wrongful Trading rules to protect Directors during COVID-19 crisis
The UK government has recognised that in order to protect otherwise solvent companies during the crisis that it has to suspend the insolvency provisions which make it an offence to trade a company when that company is insolvent.
Under section 214 of the Insolvency Act 1986 the court can also declare that the director of a company is liable to contribute to the assets of the company if the director knew or ought to have concluded, that the company had no reasonable prospects of not going into an insolvent liquidation and did not take every step that ought to have been taken by that director to minimise the potential los to the company’s creditors.
A finding of wrongful trading against a director would also normally result in that director being disqualified from acting as a director for a period of years.
The UK government intend to backdate the suspension to 1 March 2020. The details off the legislative changes have not yet been published.
For more details contact John Carruthers – firstname.lastname@example.org; 0141 404 1091.