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Coronavirus: UK reshapes insolvency laws to help save struggling businesses during crisis

Tom McArthur
Page editor
Alok Sharma answering questions from the media via a video link during a media briefing in Downing Street, London, on coronavirus. (Photo by PA Video/PA Images via Getty Images)

Bankruptcy laws and other rules will be changed in the coming weeks to help struggling British businesses stay afloat during and after the coronavirus pandemic, it was announced today.

Business secretary Alok Sharma announced the latest measures at the government’s daily coronavirus media briefing.

“Red tape” will be slashed to allow new producers of hand sanitiser to bring products to market "in a matter of days", he said.

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Mr Sharma announced changes to insolvency rules to allow firms "greater flexibility as they face the current crisis".

"It is crucial when the crisis passes, as it will, we are ready to bounce back," he said, as he detailed measures to help businesses "emerge intact the other side of the Covid-19 pandemic".

"These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends whilst ensuring creditors get the best return possible in the circumstances," he continued.

The new rules will allow companies undergoing restructuring to continue access to supplies and raw materials.

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And, he said, there would be a temporary suspension of wrongful trading provisions for company directors to remove the threat of personal liability during the pandemic, which will apply retrospectively from March 1.

"However, to be clear, all of the other checks and balances that help to ensure directors fulfil their duties properly will remain in force."

Companies required to hold annual general meetings will be be able to do so flexibly in a matter compatible with public health guidance, Mr Sharma said.

"This might include postponing or holding the AGM online, or by phone using only proxy voting," he said.

Prime Minister Boris Johnson held a video conference call on Saturday and continues to lead the Government's efforts to combat Covid-19 as he self-isolates after testing positive for the illness, Business Secretary Alok Sharma said.