The Corporate Governance and Insolvency Bill will introduce a new moratorium to give businesses breathing space from creditors while they seek a rescue package.
It will also prevent termination clauses that engage on insolvency, preventing suppliers from ceasing supply or asking for additional payments while a business is going through a rescue process.
The bill temporarily removes the threat of personal liability for wrongful trading from directors who try to keep companies afloat amid the pandemic.
Welcome respite
It will enable businesses to hold closed annual general meetings, conduct business and communicate with members digitally and extends filing deadlines.
Temporary measures will also be allowed retrospectively in a bid to be as effective as possible.
UKHospitality (UKH) said the bill was a very important piece of legislation from the Government and is something the trade body had been pushing for.
Chief executive Kate Nicholls said: “It should provide businesses with some very welcome respite from aggressive landlords and valuable breathing space to restructure their businesses.
“It is very encouraging to see the Government listening to the concerns of tenants and landlords, and acting decisively on what is a complex issue.”
Long-term solutions
She added: “It should give some impetus for bringing landlords to the table to understand the pressures tenants are facing.
“The majority of landlords have been co-operative but a minority have aggressively pursued hospitality businesses that are mothballed, have no revenue and cannot hope to pay. It is also positive to see protection extended to landlords to ensure they are not obliged to pursue tenants.
“Extension of the moratorium would allow more time for businesses and Government to get to grips with the scale of the crisis so we can begin to work out long-term solutions to protect local communities.
“Measures in the bill will provide more breathing space to deliver rent solutions with lower rent liabilities through mandated agreements.”
Business secretary Alok Sharma outlined the pandemic was a challenging time for businesses.
He said: “Our proposals have been widely welcomed by business groups. The bill will help companies that were trading successfully before the Covid-19 emergency to protect jobs and put them in the best possible position to bounce back.”
