Henry and Banwell Chartered Accountants > News > COVID-19 > COVID-19 – Working While on Job Retention Scheme & Relaxation of Insolvency Rules

COVID-19 – Working While on Job Retention Scheme & Relaxation of Insolvency Rules

  • Posted by: Michael Winkelmann

Coronavirus Job Retention Scheme – changes to the scheme affecting Volunteering and reinstating Redundant workers

An announcement on 30 March 2020 by the Government confirmed :

  1. That those made redundant after 28 February can be reemployed and placed on furlough.
  2. Those on furlough will also be permitted to volunteer without risking their pay and will be able to join those members of the public who have signed up to help the NHS during the coronavirus outbreak.

Changes to Insolvency rules to avoid wrongful trading

On 28 March 2020, the Government announced new insolvency measures to support businesses under pressure as a result of the coronavirus outbreak. 

The Government will amend insolvency law to give companies breathing space so they can keep trading while they explore options for rescue, and will also temporarily suspend wrongful trading provisions retrospectively from 1 March 2020 for three months.

In summary, the emergency insolvency law changes include:

  • A moratorium for companies to give them breathing space from creditors enforcing their debts for a period of time while they seek a rescue or restructure;
  • Protection of their supplies to enable them to continue trading during the moratorium;
  • A new restructuring plan, binding creditors to that plan;
  • Proposals to include key safeguards for creditors and suppliers to ensure they are paid while a solution is sought; and
  • Temporary suspension of wrongful trading provisions to give company directors greater confidence to use their best endeavours to continue to trade during this pandemic emergency, without the threat of personal liability should the company ultimately fall into insolvency.