Written by: Keith Tully
The government has announced extensions to corporate insolvency and governance measures brought in to offer some extra breathing space to companies and their directors during the coronavirus pandemic.
Policies designed to protect businesses from going bust because of the crisis were first introduced earlier this year through the Corporate Insolvency and Governance Act and were set to expire on September 30th.
But those protections will now stay in place until the end of 2020, with statutory demands and winding up petitions to be restricted with the stated aim being to “protect companies from aggressive creditor enforcement action as a result of coronavirus related debts”.
Meanwhile, temporary moratorium rules are officially being extended until March 30 2021, with requirements for entry relaxed to give companies a better chance of weathering the financial storm that the Covid-19 crisis has come to represent.
“It is vital that we continue to deliver certainty to businesses through this challenging time, which is why we are now extending these important and necessary measures to protect companies from insolvency,” said the business minister Lord Callanan in a statement.
The insolvency and restructuring industry’s main trade body R3 has welcomed the temporary extensions of Covid insolvency measures and the support packages promised to businesses through the chancellor Rishi Sunak’s ‘Winter Economy Plan’.
However, the organisation’s president Colin Haig has also raised questions about what the government might do in future to support the huge numbers of companies that took on high levels of debt this year as they sought to survive financially against a backdrop of the Covid-19 crisis.
Specifically, Mr Haig has highlighted the importance of HMRC, with the suggestion being that much will rest on what the Revenue’s attitude will eventually be to pursuing Covid-related debts in the coming years.
“We would welcome HMRC adopting a constructive approach to sensible, well-structured restructuring proposals,” R3’s president said in a statement.
“They [HMRC] are an important stakeholder in insolvency and restructuring procedures and their support at this time is and will be very significant.”
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