COVID-19 Business updates for 28th March

Today the Business Secretary announced the relaxation of the insolvency rules, which could help businesses avoid liquidation due to coronavirus.

The wrongful trading rules were introduced into UK insolvency law in 1986 and make it an offence for a company director to continue to trade if they know the business is unable to void going into liquidation.

Wrongful trading is when the directors know their company doesn’t have enough assets ie cash, stock, debtors and have no plans of how they will pay their creditors. It is unacceptable for directors to continue trading knowing they are worsening the position of their creditors and building further debt.