My colleague Heidi has previously posted about the suspension of wrongful trading laws during the COVID-19 pandemic noting that "the relaxation of the law means that directors who continue to trade companies during this period will not be found at fault of wrongfully trading companies when they ought to have realised that there was no prospect of avoiding insolvency".
The move was designed to assist directors in paying staff and suppliers through the pandemic, without running the risk of later being found liable under the wrongful trading provisions of s214 of the Insolvency Act. It is the concern over being found personally liable for the debts of a company, which can lead directors to place a company into a formal insolvency process - with that concern lifted (albeit for a limited time), the aim was to help companies continue to 'mothball' through the pandemic and then attempt to recommence profitable trade out the other side.
Initially, the government announced that the provisions would be suspended for three months, with retrospective effect from 1 March 2020. It was announced yesterday that this period would be extended to 30 June 2020 (i.e. for an additional month).
There are still concerns about the effectiveness of this suspension - all other directors' fiduciary and statutory duties remain in full force and effect. Nonetheless, it now seems that 30 June is going to be a key date for struggling businesses as, without any announcements of further extensions, this will be the date that the wrongful trading suspension provisions and the restrictions on the presentation of statutory demands / winding up petitions by commercial landlords end (see this post).
On 14 May, the government announced the temporary suspension of wrongful trading liability will now continue until 30 June