On Thursday 25 June 2020 the Corporate Insolvency and Governance Act (the Act) received Royal Assent. The Act makes both temporary and permanent changes to the UK insolvency laws.
One of the significant measures can be found at clause 10 of the Act. This is the temporary relaxation/suspension of liability for wrongful trading under sections 214 and 246ZB of the Insolvency Act 1986. The intention of this measure is to allow directors to ensure that their businesses continue through the COVID-19 pandemic without fear of personal liability for wrongful trading. However, wide drafting may have raised as many questions as the answers it provides.
Our insight covers the changes to wrongful trading laws, the potential for exploitation and risk along with other changes to UK Insolvency Law.