On 4 June 2020 the Office of the Director of Corporate Enforcement (ODCE) issued welcome guidance for directors of companies that ultimately become insolvent because of the COVID-19 pandemic. This guidance is welcome and is in line with representations made by Philip Lee
at the outset of the COVID-19 pandemic.
COVID-19 has affected almost every business sector with many businesses having had to close temporarily – some will reopen and thrive, others may not reopen at all and those that do may unfortunately not survive.
Directors of a business that does not survive due to insolvency face a real risk of restriction proceedings being brought against them with the added worry of potentially being held personally liable for company debts in certain circumstances.
The updated guidance provided by the ODCE is welcomed by us at Philip Lee as it provides directors with some comfort that the ODCE will not generally look to restrict directors who have acted honestly and responsibly in circumstances where the company has become insolvent as a consequence of events “largely, and genuinely, outside the directors’ control”.
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