We understand that these are challenging times for directors and businesses. The current situation is putting a huge strain on many organisations – very few sectors will emerge unscathed. As a business community, we are being forced to rethink the way we operate – either because of an inability to operate at all under the current restrictions or because of concern over what shape our business model should take over the next few months as government restrictions are eased.
There is a plethora of government assistance now on offer to support businesses that are adversely affected by the virus – furloughing staff, claiming business grants, rates relief, HMRC tax and vat deferral and a range of emergency loan funding. As business advisors, Harbinson Mulholland can help to steer you through these schemes and guide you towards the options that will work best for your particular business. Some of these measures offer temporary respite only, and some carry financial risk and consequences, both corporate and personal, which will need to be assessed prior to uptake.
As a result of the coronavirus crisis, the government has also announced that it will be introducing new insolvency legislation with the intention of temporarily suspending the ‘wrongful trading’ rules which apply to insolvent companies.The Bill will temporarily relax the threat of personal liability for wrongful trading from company directors while they make their best efforts to continue to trade during the initial period of the COVID-19 pandemic.
However, the provisions in the Bill do not provide a blanket suspension of the wrongful trading provisions. When determining the personal liability of the director (the contribution [if any] to a company’s assets), the court is to assume that the director is not responsible for any worsening of the financial position of the company or its creditors that occurs during the relevant period (1 March to 1 June 2020). Whilst directors may not be liable to contribute to the losses in this period, losses incurred in the periods before and after COVID-19 still remain a factor. Also, directors may still be subject to action for other breaches of duties during the COVID-19 period.
It is imperative therefore that directors use this new’ breathing space’ to seek the specialist advice they need from a licensed insolvency practitioner to either restructure their business and make it viable to trade on post COVID19 or if this is not possible, take the appropriate steps to cease trading.
We have 2 licensed insolvency practitioners in house In Harbinson Mulholland qualified to provide commercial, practical and timely specialised insolvency and corporate reconstruction advice.
Take time to understand the options available to you and your business – speak to one of our licensed insolvency practitioners today free of charge and find out what options are available to you. In these stressful times if you feel you would benefit from advisory support for your business or for your own personal position (e.g. as a director) then Harbinson Mulholland as a firm is here to help. Contact me in confidence for further information and guidance- [email protected]
