The UK Government wants businesses to continue running and keep
people in employment while the COVID-19 uncertainty resolves
itself.To help that it will suspend the wrongful trading offence
for 3 months from 1 March 2020.
Current trading uncertainty has made the wrongful trading
offence a particular concern for directors.Under existing laws, if
a director knows (or should have concluded) that there is no
reasonable prospect of the company avoiding an insolvent
liquidation or insolvent administration, they must take all the
steps which a reasonably diligent person would take to minimise any
potential loss to the company’s creditors.
If the company goes into insolvent administration/liquidation
and the English court concludes that the director did not comply
with this duty, they can be liable to make a personal contribution
to the company’s assets.
