At the time of writing Directors retain their duties under the Insolvency Act and Companies Act. However unlike in Germany and Spain where obligations to file for Insolvency protection were far stricter, our insolvency regime is more nuanced when it comes to the obligation to file for insolvency, and snap decisions should not be made at this time.
The next few weeks will see businesses come under enormous strain, it is not going to be easy to keep going BUT the Chancellor confirmed he did not want to see businesses go bust and we agree. He unveiled significant support for business, including the ability to obtain cheap (initially interest free) loans, with the aim of relieving cashflow pressures. Assuming you had a stable business pre-COVID-19, and are facing temporary (albeit unknown) cashflow insolvency, it may well be in creditors’ interests to access the loan funding (amongst the other reliefs/grants available) and to take other reasonable steps to see you through the coming weeks and months.
Our Top Ten Tips remain as a starting point for dealing with the current crisis. Documenting decisions through minutes of board meetings (considering the impact of daily briefings from Number 10), cashflow forecasts supplemented by the govt. backed loan over a reasonable period, and a plan to return to profitability when ‘normal’ trading returns may well justify the continuation of trade.
Please see our website for further commentary on the developing situation.