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Insolvency rules suspended to help struggling firms

Alok Sharma: ‘common sense approach

Struggling companies undergoing a rescue or restructure process will be allowed to continue trading, giving them breathing space to avoid insolvency.

The change involves temporarily suspending wrongful trading provisions retrospectively from 1 March for three months for company directors so they can keep their businesses going without the threat of personal liability.

Firms will be able to buy much-needed supplies, such as energy, raw materials or broadband, while attempting a rescue,.

UK Business Secretary Alok Sharma said: “Applying a common sense approach to regulation will ensure products are safe and reach the market without any unnecessary delay, getting vital protective equipment such as face masks to frontline staff as quickly as possible.

“Today’s measures will also reduce the burden on business, giving bosses much-needed breathing space to keep their workers employed and their companies going.”

Matthew Fell, chief UK policy director at the CBI, said: “The temporary suspension of wrongful trading provisions, along with other measures, will give much needed headroom for company directors to enable otherwise viable businesses to use the government’s support package and weather this crisis.”

The Business Secretary also announced today that the Government will introduce legislation to ensure those companies required by law to hold Annual General Meetings (AGMs) will be able to do so safely, consistent with the restrictions on movement and gatherings introduced to address the spread of coronavirus. 

Companies will be able to hold AGMs online or postpone them.

This measure follows an announcement earlier this week that companies would automatically and immediately be granted a three-month extension to the filing of their accounts following a fast-track online process.  

Over 10,000 businesses have already successfully applied for the extension.

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