Here's our weekly round-up with a couple of legal snippets, followed by positive (yes, positive) news stories.
Keeping in touch in new ways, we look forward to hearing your news and remain on hand to assist with any property-related legal issues.
Changes to insolvency regime to protect businesses and directors
The Government has announced the suspension of legislation that prohibits wrongful trading to protect directors, along with the introduction of a range of other measures to give businesses some breathing space.
Wrongful trading
The law on wrongful trading provides that a director may be held personally liable if they continue to trade a business when they know or ought to know that the company has no reasonable prospect of avoiding insolvency. This rule understandably makes directors wary of taking on new liabilities in a time of economic crisis where decisions on the viability of a company are more complicated. The rules on wrongful trading are to be suspended with retrospective effect from 1 March 2020.
The suspension offers company directors some protection in these uncertain times. Nevertheless directors continue to be bound by other fiduciary and statutory duties to the company and its creditors and rules on fraudulent trading remain in force. Directors therefore must continue to consider carefully a company's solvency position and act appropriately.
Insolvency protection
The Government has also indicated that it will introduce wider changes to the insolvency regime to protect businesses. It is currently anticipated that a company will be able to file for insolvency protection while its board of directors retains control. The legislation is likely to provide companies with the protection of a moratorium preventing creditors taking action while the board formulates proposals to restructure the business. These proposals would then be voted on by creditors. It is also expected that legislation will prevent the enforcement of any clause in supplier contracts that terminates the parties’ relationship in the event of insolvency.
This new process will allow companies to retain control, giving them breathing space to continue trading where insolvency is a risk. Creditors, however, may consider these measures risk delaying the inevitable and give rise to more uncertainty than the appointment of an administrator or liquidator.
Winding-up petitions
Meanwhile the ability of creditors to bring winding-up petitions has effectively been suspended by the High Court's decision to adjourn all winding-up petitions. Creditors who wish to continue their petitions must file special pleadings to obtain the Court’s leave to continue.
Positive news!
Air quality is improving as a result of the lockdown: The National Centre of Atmospheric Science shows a marked reduction in nitrogen dioxide and in particulate matter, an improvement so extreme it can be seen from space.
The Bafta Games Awards Ceremony went ahead with Dara O'Brien filming from his basement wearing black tie.
With 8 races cancelled so far, F1 teams in the UK have turned their attention to helping out with the supply of medical equipment.
Sports commentators are finding new subjects, our favourite so far is the BBC's Andrew Cotter commentating on his dogs, Olive and Mabel, demolishing their supper.
Homeless pets in the US are finding homes quicker than ever.
