In these challenging times, the Government clearly wants to provide a temporary shield to companies who are unable to pay their debts due to COVID-19. The Corporate Insolvency and Governance Bill 2020 is not sector specific – the changes apply to any company that can be wound up and to any type of debt, not just rent liabilities.
A creditor cannot present a winding-up petition unless they have reasonable grounds to believe that coronavirus has not had a financial effect on the company or the ground for petitioning would apply in any event, regardless of coronavirus. Further, the court will only make an order if satisfied that the grounds for petitioning would have arisen even if coronavirus had not had a financial effect on the company.
So under these circumstances you will still need to be prepared so that your clients and/or creditors have all the accurate information to hand to make an informed decision on matters arising.
This means that going forward where Companies and Directors are concerned, full due diligence is still needed. Being aware of a Company’s background, and also a Directors assets, through accurate profiling reporting provides key details and gives an indication as to how a matter will pan out. Tracing assets prior to any legal action could give a clear view as to whether this is the best course of action and the best way of recovering the debt.
What type of information do Companies need:
Property ownership
Shareholdings
Other business interests
Plant/Machinery/Vehicles
So whatever these times throw at you, you still need to be prepared!
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Source: Mayer Brown/Mondaq 5/6/20