Clarkslegal LLP - Solicitors in Reading and London

Legal Updates

Upcoming changes to the UK’s insolvency regime announced

31 March 2020 #Business Recovery & Insolvency #Business Recovery & Insolvency

On 28 March 2020, the UK Government announced that it intends to temporarily change the UK’s insolvency laws in response to COVID-19. More details are to follow in relation to the exact changes, but it is worth remembering that Parliament is currently in recess until 21 April 2020.

Key changes will be applied to the offence of wrongful trading.  Wrongful trading rules make it an offence for a company director to continue to trade if they know their business is unable to avoid going into liquidation.  The violent interruption to the economy and business as a consequence of the pandemic would likely trigger many breaches of these provisions. In order to support the mothball and suspension of business during the Government imposed shut down, provisions that would otherwise render directors personally liable for wrongful tradingas a result of the coronavirus will be temporarily suspended.

This change will now protect directors if they fail to take all steps required to minimise potential losses to creditors once their business has no reasonable prospect of avoiding an insolvent liquidation/administration process.  This may prevent corporate collapses in the long run as directors will have greater and quicker decision-making abilities during the pandemic.

The government explicitly asserted that all other existing laws and duties applicable to directors will remain in force. In particular, regulations relating to the avoidance of fraudulent trading by directors alongside the threat of director disqualification will not change.


Clarkslegal, specialist Restructuring & Insolvency lawyers in London, Reading and throughout the Thames Valley.
For further information about this or any other Restructuring & Insolvency matter please contact Clarkslegal's restructuring & insolvency team by email at by telephone 020 7539 8000 (London office), 0118 958 5321 (Reading office) or by completing the form on this page.
This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full General Notices on our website.

Read more articles

Ashan Arif

Ashan Arif

T: 0118 960 4651
M: 07825 040 062


Business Recovery & Insolvency team
+44 (0)118 958 5321