Government relaxes insolvency rules

Posted on 30th March 2020 by Streets

Image to represent Government relaxes insolvency rules

In recognition of the exceptional financial circumstances that businesses are currently facing, the Government has announced a set of changes to the insolvency system for those companies undergoing restructure.

These changes are designed to give business owners more breathing space if their business is hit by the impact of the Coronavirus.

Business Secretary Alok Sharma announced on Sunday 29 March 2020, that struggling companies would be able to access supplies and raw materials whilst restructuring their finances.

In addition to this, the wrongful trading provisions have been temporarily suspended for three months with this measure backdated to 1 March 2020.

Previously, under the Insolvency Act 1986, boards had a strict duty to announce whether the company had stopped trading if the company was insolvent or if the insolvency could not realistically be avoided in the future, and company directors could be held personally liable for continuing to trade if they knew the business is facing insolvency.

Now as a result of the suspension, company directors will be allowed to continue trading without facing potential threat of personal liability for their decisions during this pandemic. However, it was made clear that all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.


No Advice

The content produced and presented by Streets is for general guidance and informational purposes only. It should not be construed as legal, tax, investment, financial or other advice. Furthermore, it should not be considered a recommendation or an offer to sell, or a solicitation of any offer to buy any securities or other form of financial asset. The information provided by Streets is of a general nature and is not specific for any individual or entity. Appropriate and tailored advice or independent research should be obtained before making any such decisions. Streets does not accept any liability for any loss or damage which is incurred from you acting or not acting as a result of obtaining Streets' visual or audible content.


The content used by Streets has been obtained from or is based on sources that we believe to be accurate and reliable. Although reasonable care has been taken in gathering the necessary information, we cannot guarantee the accuracy or completeness of any information we publish and we accept no liability for any errors or omissions in material. You should always seek specific advice prior to making any investment, legal or tax decisions.

Expert insight and news straight
to your inbox

Related Articles

Self-assessment payments on account

Self-assessment taxpayers are usually required to pay their income tax liabilities in three instalments each year. The first two payments on account are due on 31 January during the tax year and 31 July following the tax year end date. These

Falling inflation – what does it mean for you?

The following notes are reproduced from a Treasury statement issued 21 May 2024. Lower inflation supports people by maintaining the purchasing power of their money. If prices only rise slowly, people can plan their budgets more effectively -

New Brooms

As time passes during the present election campaign, its seems more likely that we may have a change of government from the 5 July. Labour have disclosed a number of tax changes they would introduce. To summarise they are: Private school fees

You might also be interested in...