New rules will allow insolvent small businesses to keep trading rather than go straight into administration.
Ahead of the budget, the government has announced new rules that will allow small businesses at risk of collapse to continue to work out their problems instead of appointing an administrator.
They are needed because of an avalanche of insolvencies awaiting the end of an effective moratorium on bankruptcies (a so-called regulatory shield) that expires at the end of December.
Since it was introduced in March the number of companies entering external administration has been unusually low compared to earlier years (at a time of unusually bad conditions) suggesting a buildup of zombie companies waiting to die.
Number of compan…