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News 2
7
Apr
Support for Companies Undergoing a Rescue Plan or Restructure
News

DATED: 7 APRIL 2020

Within the Business Secretary, Alok Sharma’s recent speech (28 March 2020) it was announced that new legislation would be introduced to assist companies who are undergoing a rescue or restructure plan.

It was announced that such legislation would provide assistance to companies who, due to the impact of COVID-19, enter financial distress however remain capable of rescue and hold sufficient funds to continue trading if a moratorium was introduced.

The measures outlined by the Business Secretary were as follows:

  • a moratorium for companies giving them breathing space from creditors enforcing their debts for a period of time whilst 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; and
  • safeguards for creditors and suppliers to ensure they are paid while a solution is sought.

It is clear that the Government’s key objective is to ensure that businesses are able to continue trading. It is hoped that these provisions would provide enough breathing space for businesses to consider their survival options, all the while keeping their businesses going and retaining staff.

It appears that these measures would be a significant support in the current climate. However, despite the Government stating that they aim to introduce this legislation at the earliest opportunity, given that Parliament is currently in recess and is not due to return until the end of April, the timescale for these provisions are uncertain. This therefore leaves the question whether the current law in respect of when a company is deemed insolvent and how creditors can issue winding up petitions remain in place.

For legal guidance on this and other issues your business may be facing, please contact Chris Brightling, Head of Corporate & Commercial

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.

Before relying on this commentary please read the Reliance on information posted section in our Terms of Website Use in our Legal section. Please note that specialist advice should be taken in relation to any specific queries and the information above is provided for general information purposes only.

Authors

Chris Brightling

Head of Department
Corporate, Banking & Finance and Commercial Law
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Our Experts

Chris Brightling

Head of Department
Corporate, Banking & Finance and Commercial Law

Caroline Armitage

Consultant Solicitor
Corporate, Banking & Finance, Commercial Law and Charities & Not for Profit

Jonathan Masucci

Senior Associate Solicitor
Corporate, Banking & Finance and Commercial Law

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