Return of wrongful trading: Pull the plug or risk personal liability?
The temporary insolvency law relaxation introduced back in March allowed struggling businesses to stay afloat. While many companies continue to navigate through economic uncertainty, the Government’s decision to reintroduce wrongful trading liability from 1 October 2020, was met with criticism. With nearly one-in-five hospitality firms seeing the severe risk of insolvency, can businesses survive the winter?
The end of Moratorium is a reminder for directors to fulfil their duties and obligations. These include acting within powers and promoting the success of the company for the benefit of the shareholders and the company’s creditors as a whole.
Any actions leading to defrauding the company, lack of steps to minimise any further potential loss to the company’s creditors, or continuing to trade while there is a prospect of going into administration, will make directors personally responsible.
The key to reducing the risk of insolvency law breaches is monitoring business solvency and liquidity and taking action quickly when a problem emerges.
If your business is struggling, seeking advice earlier will limit your personal liability and can stop the avoidable insolvency.
If you suspect that there are issues within your company, we can assist with identifying them and create a rescue plan. We will be beside you, helping you through the process. Contact us for a free impartial consultation on 📞0800 118 2948.
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