In an apparent U-turn on the CIGA Extension Regulations, new regulations came into force on 26 November, reintroducing the suspension of wrongful trading. This will mean that, with effect from 26 November 2020 and until 30 April 2021, administrators and liquidators will be unable to raise claims for wrongful trading against the directors of any insolvent company in respect of any of the company's losses or its creditors' losses which arose directly as a result of continued trading during this second period of suspension.
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The Covid-19 crisis and the severe economic disruption caused by it has left many companies dealing with the prospect of an insolvency situation entirely outwith their control and through no fault of their own. The insolvency profession is adapting to this imminent threat and the existing (albeit relatively untapped) tool of "light touch" administration has been identified as a possible means of enabling certain companies to get through the crisis. 'Light touch' administration gives a company the benefit of a statutory moratorium from creditor action while the directors continue to exercise powers to manage the business specifically granted by the administrators.