Backdrop to Voluntary Administration

Faced against unparalleled uncertainties caused by the COVID-19 pandemic which is affecting business at all levels, company directors may find it difficult to ascertain that they would most likely be able to continue operations or promote the success of the company for the benefit of its members as a whole. Breaks in supply chain, faltering demands resulting in sharp decline in revenue, cash flow issues, failure to comply with loan repayments are all factors that may unfortunately progressively result in a number of companies facing insolvency or near insolvency situations.

It should be noted that directors have a duty to act with care, skill and diligence while holding their office as directors. Directors must therefore be prudent and be sufficiently prepared to mitigate impending risk of financial difficulties while preventing the risk of been exposed to personal claims.