COVID-19 Wrongful trading In Guernsey

The UK Government has announced new insolvency measures, intended to temporarily suspend wrongful trading provisions, in order to protect companies from being put into an insolvency process by directors who may fear that they will become personally liable during the pandemic. The move will allow directors of companies to pay staff and suppliers, even if there are fears the company could become, or is insolvent. A similar provision has not been adopted in Guernsey yet, but could soon follow. So what are the current wrongful trading provisions in the Bailiwick of Guernsey, and what should directors be considering in these extraordinarily uncertain times?

The Law in Guernsey

Wrongful trading under Guernsey law is governed by section 434 of the Companies (Guernsey) Law, 2008. Pursuant to that provision, directors can incur personal liability for wrongful trading if they, 'knew or ought to have concluded that there was no reasonable prospect of the company avoiding