New restructuring tools to be added to insolvency law

New restructuring tools to be added to insolvency law

ARTICLE · By Timber Trade Federation · 31 March 2020

As otherwise robust companies experience cash flow problems, the Government is making changes to insolvency law by adding new restructuring tools that mirror the USA’s Chapter 11 procedure.

Changes being made include:

  • Giving companies greater breathing space from creditors seeking to ensure their debts for a period of time while they seek a rescue or restructure;
  • Protecting their supplies to allow them to continue trading during this period; and;
  • A new restructuring plan, which will bind creditors

 

Key safeguards for creditors and suppliers will be included to ensure they are paid, while existing laws against fraudulent trading and the threat of director disqualification will continue to act as an effective deterrent against reckless misuse of these new measures.

Wrongful trading provisions are also being suspended retrospectively from 1 March 2020 for three months so directors can keep their businesses going without the threat of personal liability.

You can find out more in Business Secretary Alok Sharma’s announcement over the weekend.

Further details of the plan are expected this week.