Notes on wrongful trading in the time of Coronavirus
Discussion
Solvency issues will be pressing on the minds of many business owners at present. The statutory provisions as to wrongful trading have been [EDIT are to be] suspended to deal with the current crisis, and here is a helpful note on this subject written by a colleague in another chambers to mine.
https://thomasmore.co.uk/wrongful-trading.pdf
https://thomasmore.co.uk/wrongful-trading.pdf
Edited by anonymous-user on Thursday 23 April 11:44
BV: this is not quite right.
While the government has announced its intention to suspend the wrongful trading provisions of the Insolvency Act with retrospective effect, this will require primary legislation. Last time I looked, there was not even draft legislation available. There is nothing in the Coronavirus Act -- not even an enabling power -- in this regard.
For my own part, I have grave reservations about the idea of suspending wrongful trading provisions wholesale (they were introduced for good reason following the recommendations in the Cork Report, which is still worth reading) and I rather suspect that if and when the legislation is eventually passed it will not be as broad as what has been said in some quarters suggests. But only time will tell.
While the government has announced its intention to suspend the wrongful trading provisions of the Insolvency Act with retrospective effect, this will require primary legislation. Last time I looked, there was not even draft legislation available. There is nothing in the Coronavirus Act -- not even an enabling power -- in this regard.
For my own part, I have grave reservations about the idea of suspending wrongful trading provisions wholesale (they were introduced for good reason following the recommendations in the Cork Report, which is still worth reading) and I rather suspect that if and when the legislation is eventually passed it will not be as broad as what has been said in some quarters suggests. But only time will tell.
Fair points.
Many unsatisfactory things about the legislative response to the crisis -
1. Failure to use the extant powers conferred by the Civil Contingencies Act 2004 - probably for political reasons.
2. Hasty, lengthy, and barely scrutinised Coronavirus Act 2020, but the Act not then used to found many important regulations, which are instead based on 1980s public health legislation.
3. The Restrictions Regulations badly drafted, accompanied by incorrect and confusing guidance, and then amended without notice (but still not on the Gov website in amended form).
OK, it's an emergency, but still could do better.
Many unsatisfactory things about the legislative response to the crisis -
1. Failure to use the extant powers conferred by the Civil Contingencies Act 2004 - probably for political reasons.
2. Hasty, lengthy, and barely scrutinised Coronavirus Act 2020, but the Act not then used to found many important regulations, which are instead based on 1980s public health legislation.
3. The Restrictions Regulations badly drafted, accompanied by incorrect and confusing guidance, and then amended without notice (but still not on the Gov website in amended form).
OK, it's an emergency, but still could do better.
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