Coronavirus: Changes to Insolvency Rules

Coronavirus: Changes to Insolvency Rules…


The government are making changes to the way formal insolvency and wrongful trading rules operate to allow businesses affected by the coronavirus crisis to continue to trade through the exceptional circumstances that they currently face.


This statement was made on 28 March but the changes will have retrospective effect from 1 March.


Business Secretary, Alok Sharma MP, announcing the changes said:

“These measures will give bosses much-needed breathing space to keep their workers employed and their companies going.”



Full details on the changes are yet to be unveiled, but it is understood that they will include:


  • A suspension of the wrongful trading rules, which would usually mean directors can be held personally liable for debts where the company has wrongfully traded.
  • A moratorium period for struggling companies, giving them time to agree a restructure or rescue plan with their creditors, while allowing them to continue to protect their supplies so trade can carry on.
  • Key safeguards for creditors and suppliers to ensure they are paid while a solution is sought.


The government have said that during this relaxation, existing laws for fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against director misconduct. Any directors who consider they may be approaching the limits of trading difficulties are encouraged to get in touch with us as we can help you assess the position and put you in touch with specialist advisors, if required.


Information on all of the government’s latest covid-19 measures are changing rapidly and the information above is correct as at 31 March 2020. Our blog is the best place to stay ahead of the latest changes.