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Covid-19 Business Rescue Government Bill Could Help Businesses Recover
The Government’s Corporate Governance and Insolvency Bill published yesterday (20 May 2020) has been welcomed by FPM Accountants who say that it is particularly pleasing that the measures, which include both temporary and permanent amendments to insolvency legislation, will apply to companies in Northern Ireland.
Temporary measures
The Bill formalises previously announced proposals aimed at helping companies affected by the Covid-19 pandemic to continue to trade while they explore rescue options. It suspends creditors’ ability to take a winding up petition against a company for three months, from 27 April 2020 to 30 June 2020, and includes provision to void statutory demands made between 1 March 2020 and 30 June 2020. The Bill also suspends wrongful trading actions against directors for three months from 1 March 2020 to 1 June 2020.
Commenting on the Bill, FPM Director Seamas Keating said: “ It is particularly welcome that the measures announced in the Government’s Corporate Governance and Insolvency Bill will apply in Northern Ireland. The measures will potentially help many viable companies who are struggling due to the impact of Covid-19 to recover.”
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Permanent measures
Permanent measures in the Bill include a moratorium giving companies formal breathing space from creditors for a period of time while they restructure or seek a rescue. Termination clauses in supply contracts will be changed so that suppliers cannot stop supplying by relying on contract terms when a customer enters insolvency.
The Bill provides for companies in financial difficulty to form a restructuring plan enabling complicated debt arrangements to be restructured and supporting the injection of new finance. Dissenting creditors can be bound by this plan, provided it is sanctioned by a court as fair and equitable and the court believes the creditor will not be worse off.
FPM Director Seamas Keating said: “Covid-19 restrictions have severely impacted many Northern Ireland businesses. When we return to the new normal, as will happen in time, corporate rescue and recovery will have a vital role to play. The new tools provided for in the Corporate Governance and Insolvency Bill enhance existing business rescue options. While the Bill has still to make its way through Parliament, and many of the measures will require secondary legislation, we are pleased that the changes will apply in Northern Ireland.”
Latest guidance and support
With Government advice being updated daily, we will be keeping this dedicated Business Support Centre and our social media channels refreshed as and when relevant. Our dedicated teams are monitoring the situation closely, but should you have any questions at this stage, please do not hesitate to get in touch with one of the FPM Team.
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