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Insolvency Law and Job Retention Scheme – COVID 19 Updates
The GGF has received more news from Government which may affect your business during these unprecedented times.
Changes to Insolvency Law
The Government has amended the insolvency law to help companies to continue to trade whilst considering options to remain solvent.
Under the plans, the UK’s Insolvency Framework will add new restructuring tools that mirror the USA’s Chapter 11 procedure, a well-established model adopted by countries around the world.
This includes:
A moratorium (a legal authorization to debtors to postpone payments) for companies giving them breathing space for from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure;
Protection of their supplies to enable them to continue trading during the moratorium; and a new restructuring plan, binding creditors to that plan
The proposals will also include key safeguards for creditors and suppliers to ensure they are paid, while existing laws against fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against reckless misuse of these new measures.
Wrongful trading provisions
The Government will also temporarily suspend the wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability, should the company ultimately fall into insolvency.
The proposals will also include key safeguards for creditors and suppliers to ensure they are paid, while existing laws against fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against reckless misuse of these new measures.
In addition, while laws against fraudulent trading and director misconduct will continue to provide a deterrent against poor practices, wrongful trading provisions in the Insolvency Act will be temporarily suspended specifically to give confidence to directors to continue trading without the threat of personal liability, should the company ultimately fall into insolvency. Find out more here
Update: The Coronavirus Job Retention Scheme
Last week the Government announced the Coronavirus Job Retention Scheme application portal would be available from 6th April, it now appears that availability will late April.
New guidance on Coronavirus Job Retention Scheme has now been published.
This scheme could save businesses an extra £300 a month for each employee and the government will now cover the employer national insurance and minimum auto-enrolment pension scheme contributions that employers pay on the wages they must pay their furloughed staff – on top of the wages covered under the scheme. Employees who are furloughed can volunteer for the NHS without risking their pay. Guidance for employers on the Coronavirus Job Retention Scheme can be found here whilst guidance for employees can be found here.
To keep up to speed with all the GGF updates on the Coronavirus crisis please visit the GGF website COVID-19 Business Continuity Support section: https://www.ggf.org.uk/covid-19/.
The GGF will continue to send Members the daily Business Continuity Support e-alerts to ensure they are kept fully up to date with this fast moving situation.
Please continue follow the Government advice and instructions to prevent the spread of this virus and remain safe and well.
