Government extends Covid support

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With the Government announcing that lockdown restrictions will not be removed until 19^th July at the earliest, it should come as no surprise that some support for businesses has been extended.

Statutory demands and winding-up petitions

The restrictions on statutory demands and winding up petitions are to remain in place for a further three months until 30^th September 2021, providing continued protection for companies from creditor enforcement action where their debts relate to the pandemic. This will come as welcome news to many hospitality businesses who are still subject to the restrictions on numbers due to social distancing measures.

Landlord enforcement action

Perhaps the biggest news is that the Government decided to continue with the stay on landlord enforcement action for commercial tenants until 25^th March 2022. This was surprising, given that landlords with residential tenants have been able to take action for arrears since the eviction ban was lifted on 31 May 2021.

The Government advised it is bringing in new legislation to ringfence any arrears that have been incurred due to enforced closures due to the pandemic, but that commercial tenants will be expected to pay their ongoing rent for the period from which they were able to open (i.e. when the lifting of restrictions allowed).

Other support measures

The relaxation of the rules around applying for a moratorium (which protects companies from creditor enforcement action) remains in place until 30^th September 2021. This means that companies can have more than one moratorium in 12 months, thus allowing for multiple applications until the end of September.

The Coronavirus Job Retention Scheme will wind down in July, with the Treasury confirming there is no extension beyond 30^th September 2021.

Directors’ personal liability

It should be noted that the suspension of wrongful trading, which is due to end on 30^th June 2021, will not be extended. This means the provision that directors will not be personally liable for any financial losses incurred will no longer apply from 1^st July 2021. If your business is struggling, you will need to ensure that you take appropriate steps to minimise potential losses to creditors.

Directors should also bear in mind they still have a fiduciary duty to the company and any breach of this in an insolvency could result in personal liability.