Government measures in key jurisdictions 4th edition - Flipbook - Page 149
United Kingdom
To find out more: Guidance on making workplaces safe for employees told they “should go to
work” - 10 key takeaways. And: Employment updates from 1 August - changes to home working,
the furlough scheme and further detail on the Job Retention Bonus.
•
Insolvency
To assist employers and employees, the UK Government has also amended the Working Time
Regulations 1998 (which govern holiday entitlement in the UK) to relax the carrying over of holiday
entitlement: under these new rules, workers will be allowed to carry-over up to four weeks’
holiday into the next two holiday years. The Government has also published guidance on holiday
entitlement and pay during the Coronavirus pandemic. To find out more: Holiday entitlement and
pay during the COVID-19 pandemic and the impact of this on the furlough scheme.
On 25 June 2020, the Corporate Insolvency and Governance Act received royal assent (the Act). It came
into force on 26 June 2020.
Has the government
The Act introduced changes to the UK insolvency laws in order to address the unique circumstances
made any changes
arising from the Coronavirus pandemic.
to insolvency
legislation?
Measures introduced included:
•
Wrongful trading provisions – As we outlined in our previous briefing, the Act will temporarily relax
the threat of personal liability for wrongful trading from company directors who continue to trade a
company through the coronavirus pandemic. The provisions set out in the Act do not provide a
blanket suspension of the wrongful trading provisions. Under the Act, directors will not be
responsible for any worsening of the financial position of the company or its creditors that occurs
during the period 1 March 2020 to 30 September 2020. These provisions may help boards where the
company is (or was) in financial difficulties and there is significant uncertainty regarding the
businesses’ financial future. It is worth noting that the timeframe is very limited and so, unless it is
extended, will apply to a past period by the time it becomes law.
Whilst directors may not be liable to contribute to the extent the financial position worsens
during this period (1 March 2020 to 30 September 2020), it is important to note that this does not
apply to the period before and after the pandemic will still be able to be reviewed and will not fall
under the protections laid out in the Act. There are likely to be significant challenges
“apportioning losses” in this manner. In addition, directors may still be subject to action for other
breaches of duties during the coronavirus pandemic.
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Company Moratorium – A proposed moratorium which will give struggling businesses a 20businesss day opportunity to consider a rescue plan, extendable by the directors for a further 20
business days or with creditor consent up to a year. The company will remain under the control of
its directors during the moratorium, and no legal action can be taken against a company during this
period without leave of the court.
•
Restructuring Plan – The proposed legislation will introduce a Restructuring Plan, allowing
struggling companies, or their creditors or members, to propose a new restructuring plan which will
provide an alternative rescue option for companies that are suffering financially. The plan will enable
complex debt arrangements to be restructured and will support the injection of new finance in order
to support a rescue.
Government measures in key jurisdictions