Corporate Insolvency and Governance Act 2020 (Coronavirus) (Extension of the Relevant Period) (No. 2) Regulations 2020

Lord Razzall Excerpts

Tuesday 19th January 2021 Grand Committee

[Lord Razzall (LD) [V]]

My Lords, like other speakers, I support these regulations, but I will touch on three points, two of which have been touched on by earlier speakers.

I note that no impact or economic assessment has been made of the effect of the regulations since they were brought in in the summer. Do the Government have any idea of how many liquidations have been postponed under these regulations and their predecessors? Presumably someone could look at how many liquidations took place in an equivalent period before Covid and at how many have not occurred since. I have no idea of the magnitude of the issue we will face once these regulations come to an end—which actually brings me to my second point.

A number of noble Lords indicated their concern that we must not get to the position, when these regulations end, where companies simply fall off a cliff into liquidation. Clearly, the Government must have given some thought to what is likely to happen, and it will be very helpful if the Minister, although not wanting to be pinned down on that, can give us some indication of the Government’s thinking. As other noble Lords have said, the lobbying organisation has suggested that HMRC should be invoked to help a soft landing, but I should welcome the Minister’s comments on whether further thought has been given to how we have a soft landing.

My third point is technical. As the noble Lord, Lord Bourne, said, it is not just the threat of being wound up that keeps company directors awake at night; it is also the question of protection from charges of wrongful trading. This was recognised by the Government in providing protection against both liquidation and unlawful trading until 30 September, but, unfortunately, although the winding-up suspension was extended to 31 December—and now further by these regulations—the wrongful trading protection was not extended at the same time, and made effective only from 26 November last year. I cannot believe this was deliberate, but was presumably an oversight, but it means that, theoretically, directors could be liable for wrongful trading from 30 September to 26 November last year. Can the Minister please confirm that directors will have protection for their actions during that period?