As a result of the coronavirus crisis, the government has announced that it will temporarily suspend the wrongful trading on insolvency rules, backdated to 1 March 2020.

Under the existing wrongful trading legislation:

New measures: as announced on 28 March 2020:

The government said:

"Relaxation of these wrongful trading rules will reassure directors that the difficult decisions they have to make about the future viability of their business will not have to be unduly influenced by the exceptional circumstances which are entirely beyond their control.

Legislation to introduce these changes will be introduced in Parliament at the earliest opportunity. Provisions will be included to enable the changes to be extended if necessary."

Who can be an insolvency practitioner?

To shut down or not?

Background to the legislative changes

The government's new COVID-19 announcements on the insolvency rules come on the back of some already outlined changes.

Back in 2018, the government published a consultation ‘Insolvency and corporate governance’. This sought views on improvements to corporate governance within companies that are in or are approaching insolvency.

In 'Consultation on insolvency and corporate governance: government response' the government made the following conclusions:


We will take steps to strengthen the insolvency framework in cases of major corporate failure by:

We will also create alternative procedures to support business rescue.

Corporate governance

We will take forward the following actions:

Where necessary we will consult further."

External links

Regulations temporarily suspended to protect companies hit by COVID-19 

2018 Consultation outcome: Insolvency and corporate governance