The hospitality sector has been one of the sectors worst affected by the Covid-19 pandemic. At the start of the New Year the country entered into a third national lockdown and as yet, it is unclear when restrictions will be lifted. All eyes will be on the now all too familiar daily statistics and the success of the Government’s vaccination programme. As operators – like the rest of the country – you can only watch and wait.
When restrictions are eventually eased and pubs are allowed to re-open, it seems likely that many operators will be trading at a loss. Aside from significant losses already incurred, a partial easing of restrictions, or a return to the tier system, may mean reduced footfall and reduced trade going forward, at least in the short term.
Wrongful trading liability – temporary suspension
In ‘normal times’, directors trading against such a backdrop could be in breach of their statutory duties and be personally liable for wrongful trading. The Government has taken steps to protect directors and the temporary suspension of wrongful trading liability has been extended until 30 April 2021. See Freeths article here
But what happens after 30 April? When society re-opens and you try to get your business back up and running, at what point could your directors potentially fall the wrong side of the law in continuing to trade?
If, as an operator, you have concerns about wrongful trading you should ensure your directors seek legal advice well in advance of re-opening. Crucially, directors should not obtain advice from the company’s own legal advisors, as there could be a conflict of interest. Wrongful trading is an issue of personal liability and directors should always instead seek separate legal advice.
For further advice contact Natalie Drought
The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.