Coronavirus (COVID-19)—proposal for temporary changes to UK insolvency law

Coronavirus (COVID-19)—proposal for temporary changes to UK insolvency law

The coronavirus (COVID-19) crisis has unsurprisingly had a significant impact on businesses around the world, putting many at real risk of insolvency. Some jurisdictions have made temporary changes to their insolvency laws to assist companies (and their directors) and individuals given the current uncertainty of how long the crisis will last, and therefore what its lasting effects will be. The Insolvency Committee of the City of London Law Society (CLLS) has submitted a paper to the Insolvency Service entitled ‘Proposals for mitigating the short term effects on viable businesses of covid-19’ suggesting a number of temporary changes to UK insolvency law.

The CLLS’ paper can be found by clicking on the link below:

Proposals for mitigating the short-term effects on viable businesses of COVID-19

 

What does the CLLS’ paper say?

The first point to note is that the proposed changes focus on assisting businesses that are viable, but which may suffer short term disruption to cash flow as a consequence of the coronavirus crisis. They are not intended to provide a solution to the problem of businesses which cease to be viable as a consequence of the coronavirus crisis.
 
The objectives behind the proposed changes are:


  • to give businesses a short breathing space in which to deal with any short term liquidity or trading issues caused by the crisis
  • to provide an additional mitigating factor in relation to wrongful trading claims and avoid directors incurring personal liability for steps taken during the crisis, and
  • to mitigate the ri

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About the author:

Stephen qualified as a solicitor in 2005 and joined the Restructuring and Insolvency team at Lexis®PSL in September 2014 from Shoosmiths LLP, where he was a senior associate in the restructuring and insolvency team.

Primarily focused on contentious and advisory corporate and personal insolvency work, Stephen’s experience includes acting for office-holders on a wide range of issues, including appointments, investigations and the recovery and realisation of assets (including antecedent transaction claims), and for creditors in respect of the impact on them of the insolvency of debtors and counterparties.