What the extension of Government business support means for Company owners?
The government has announced the extension of business support measures introduced to combat the pandemic. If you are a business owner currently utilising the protections to help your business through this difficult time this is good news. You must, however, also prepare for the end of these protections. This extension is a perfect opportunity to do so.
When until have the protections been extended?
Initially in place until the end of June, the Government has now extended protections for companies until the 30th of September.
Which business support measures have been extended?
All of the extended measures relate primarily to insolvency. They are designed to protect you and your company until such a time as it is possible to resume normal trading.
The three primary areas of protection are:
- Wrongful trading
- Statutory Demands
- Small Suppliers
Director’s liability for Wrongful Trading is eased if the financial position of the company has become worse. This only applies for the period from the 26th of November 2020 until the 30th of June 2021.
Wrongful trading is a type of civil wrong found in UK insolvency law, under Section 214 Insolvency Act 1986. It enabless contributions to be obtained for the benefit of creditors from those responsible for the mismanagement of the insolvent company.
In terms of Statutory Demands and winding-up orders, they will remain restricted. Companies will be protected from creditor enforcement actions on all debts relating to Covid-19 until the 30th of September deadline.
Support for Small suppliers is two-fold. Large suppliers will not be able to request additional payments or alter supply while a company is in the process of being rescued. Small suppliers will have the option of stopping supply going to a business in insolvency.
Your next steps
The extension of these measures will undoubtedly come as a relief to you as a business owner. These schemes have been helpful to many businesses and may allow yours to survive until normal trading resumes.
These extensions though are not intended solely to provide a temporary break for businesses but to allow them adequate time to prepare for the removal of support.