Insolvency laws will be adapted to allow struggling businesses to “weather the storm” during the coronavirus crisis, the Business Secretary announced on a weekend when a Government doctor warned normal life was unlikely to resume for six months.
Alok Sharma announced changes to bankruptcy rules in efforts to allow firms to continue trading and “emerge intact the other side of the Covid-19 pandemic”.
Adjustments to the insolvency regime will include new rules that allow companies to continue buying supplies, such as energy, raw materials or broadband, while attempting a rescue.
Mr Sharma told a Downing Street briefing on Saturday night there will also be a temporary suspension of wrongful trading provisions for company directors, removing the threat of personal liability during the pandemic.
This will apply retrospectively from March 1 for three months.
He said: “Our overriding objective is to help Ƶ companies which need to undergo a financial rescue or restructuring process to keep trading.
“These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends, whilst ensuring creditors get the best return possible in the circumstances.”
Mr Sharma said legislation would be brought forward at the “earliest opportunity” but added: “However, to be clear, all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force.”
In response, Suren Thiru, head of economics at the British Chamber of Commerce, said: “Companies that were viable before the outbreak must be supported to ensure they can help power the recovery when the immediate crisis is over.
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“Cashflow remains an urgent concern for many businesses, so it’s vital that Government support packages reach businesses and people on the ground as soon as possible.”
On Sunday night Dr Jenny Harries, deputy chief medical officer for England, said that while the Ƶ would not necessarily be in "complete lockdown" for six months, social distancing measures would only be lifted gradually.
She said the three-week reviews on the measures to slow the disease’s spread would likely continue for half a year. She added: “But we must not then suddenly revert to our normal way of living, that would be quite dangerous."
