New Corporate Insolvency measures to safeguard workers
Published 8 November 2018
The Business Secretary recently announced a number of new measures to help safeguard workers, pensions and small suppliers if a company is financially distressed or goes under. The measures were set out as part of the Government’s response to the corporate governance and insolvency consultation (March 2018) and will aim to ensure Directors adhere to their responsibilities as an employer.
While the majority of UK companies are run responsibly, a small minority of Directors are profiting from dissolved companies. Directors who are found to be deliberately dissolving companies to avoid paying workers or pensions, could face substantial fines or even disqualification.
In addition to this, the Government is also introducing new measures that will give financially viable companies more time to rescue their business. These measures include:
giving companies additional time to restructure or seek new investment to help safeguard jobs
enabling financially-distressed companies to continue trading through the restructuring process, ensuring that small suppliers and workers still get paid
new restructuring plans to rescue viable businesses and preserve jobs
Similarly, better training for Directors will be available to make them more aware of their legal duties. The proposed reforms are intended to help strengthen the UK’s business environment as part of the Government’s long term plans for business investment and growth.