Uk’s lockdown was announced the 23rd of March. The following measures have been adopted by the Government in order to face the crisis originated by COVID-19:
£330 billion assistive financial package to help businesses cope.
A Coronavirus Business Interruption Loan Scheme to allow for easier lending and overdrafts for businesses of -Up to 5 million Pounds in value -No interest for the first 12 months -Up to 80% of the loan value guaranteed by the UK government
Businesses of 250 employees of fewer will be eligible to refund of up to 2 weeks of statutory sick pay for each employee eligible for it due to COVID-19.
Some businesses will be eligible for a Business Rates holiday.
The government has also announced COVID19 Corporate Financing Facility in which the Bank of England will buy short term debt from companies as a way to support companies affected by short-term funding issues.
Relief to accompany a slowdown or absence in business activity
Suspension of wrongful trading provisions under which directors can become personally liable for allowing their companies to continue trading at a time when there was no reasonable prospect that the company would avoid insolvency liquidation.
This suspension will be put in place retrospectively from March 1st, 2020 for three months. It is important to note that other rules against fraudulent trading and director disqualification rules have remain unchanged, this is, to act as a deterrent to directors with such intents.
Legislation to introduce these changes will be introduced in Parliament « as soon as possible” according to UK government, however the exact time frame remains up in the air as the parliament itself will be in recess until the 21st of April 2020
The proposed legislation includes:
- A moratorium for companies (giving a short respite to creditor enforcing their debt for some time while they seek a restructure or rescue.).
- A protection of their supplies so as to allow them to continue trading during the moratorium.
- A new restructuring plan that binds creditors to it.
A deferral of VAT payments due 20 March 2020- 30 June 2020
No interests or penalty will be charged because of the deferral
July 2020 Income Tax payment deferral to 31 January 2021
UK Government has increased the Business Rates Retail Discount applicable in England to 100% for the 12-month period beginning 1 April 2020.
The scope of the relief has also been extended to retail, hospitality and leisure businesses
Specific Insolvency measures
Above mentioned suspension of wrongful trading provisions
90 days Moratorium to give companies facing covid19 related issues “breathing space” in order to seek a rescue or to restructure and prevent creditors from enforcing debts during that period.
Measures will build on the ones announced on August 2018 however these do not mention whether the moratorium will extend to already insolvent companies
This information was drafted by the European Insolvency Practitioners Association