The UK Government has setup the Corporate Governance and Insolvency Bill in Parliament, which will put in place a number of measures to change the insolvency and company law to help businesses affected by the financial impact of the Coronavirus (COVID-19).
The new Bill contains six insolvency measures and two corporate governance measures which will provide vital support to businesses to help them through this period of unprecedented instability. It will introduce temporary easements and flexibility to companies who have had an extreme downturn in sales and operational availability.
So what will the new insolvency bill provide?
The bill introduces a moratorium to give companies breathing space from their creditors while they seek a rescue. It prohibits termination clauses that push for insolvency, thus preventing suppliers from stopping their supply or asking for additional payments while a company is going through a rescue process. It also introduces a new restructuring plan that will bind creditors to it and enabling the insolvency mechanism to be sympathetic to the demands of the emergency situation caused by the global pandemic.
Another important measure introduced is the temporary cessation of personal liability for wrongful trading, protecting Directors who try to keep their companies afloat and also temporarily stops creditors from filing statutory demands and winding up petitions for debts related to the coronavirus.
The final measures are the temporary easing of company responsiblities on businesses by allowing them to hold closed Annual General Meetings (AGMs), conduct business and communicate with members and shareholders electronically and also extending filing deadlines. These temporary measures will also be made available retrospectively so as to be as effective as possible for companies suffering the most during these difficult times.
“This is a particularly challenging time for businesses right across the UK, and we are doing all we can to support them through this period.” Alok Sharma, Business Secretary
The new bill will help companies that were trading successfully without any problems before the Coronavirus pandemic, ensuring jobs are protected and allows the best possible chance to return to normal business activities.
The bill also provides Directors with reassurance with their legal responsibilties whereby those who act responsibly will not suffer from the current UK insolvency process. This will help Directors retain their businesses whatever their size, but it will especially help small companies who have experienced significant damage to their businesses and also aid the people who they employ and service.
Overall what this bill provides to the businesses that are struggling the most is breathing space to enable them to repair and recover their very viable companies, benefit from and access rescue options without fear of external legal factors or debt frameworks levied by creditors, as well as deal with time constraints and application delays without worrying about the financial and company impact as each day passes before a rescue.
The Corporate Governance and Insolvency Bill was introduced on Wednesday 20 May and will now make its way through Parliament. Many of the measures in the bill will need secondary legislation before they come into force and this will be introduced by the government in due course. In the meantime, nothing will change until that legislation is introduced.
To get your invoice debts collected effectively as well as manage your creditors unemotionally throughout the Coronavirus pandemic and keep your business afloat, speak to us on 0208 720 7309 or email firstname.lastname@example.org. You can also access COVID-19 specific credit control support at https://www.creditcontroluk.co.uk/coronavirus-debt-support.