Rules about wrongful trading have been temporarily suspended to provide directors with a greater degree of comfort when taking difficult decisions during the COVID-19 crisis – but they must still demonstrate that they have acted reasonably, says Andrew Turner of Lovewell Blake.
Company directors facing difficult decisions during the coronavirus crisis have been handed a potential lifeline with the suspension, backdated to 1st March 2020, of wrongful trading provisions, which might otherwise have hampered their ability to take decisions to secure the future of their businesses.
The current wrongful trading provisions mean that company directors can face personal liability if they fail to take account of the impact on creditors in a situation where trade is continued, when the director knew, or should have concluded, that the company couldn’t reasonably avoid liquidation (or administration) and creditors wouldn’t be paid in full.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules here