Government announces new plans to help keep struggling businesses afloat

Struggling companies during the coronavirus pandemic will be given extra support under new legislation from the Government.

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Companies facing insolvency will be given a "safe harbour", Grant Robertson says. Source: 1 NEWS

Wage subsidies were previously announced to help companies continue paying their employees.

Under today's new legislation, companies facing insolvency will be given a "safe harbour", Finance Minister Grant Robertson says.

"These measures provide an accessible and pragmatic means of helping some businesses to weather the storm in a way that does as little harm as possible to creditors’ interests," he told media today.

“These measures will support the Government’s work to cushion the economic impact for New Zealand and to support businesses and protect jobs and incomes."

The legislation will see temporary changes to the Companies Act and will go to Parliament before becoming retrospective.

It includes giving temporary relief for entities that are unable to comply with requirements in their constitutions or rules because of Covid-19 and allowing affected businesses to place existing debts into hibernation until they can resume normal trading.

However, company directors will need to "act in good faith".

"I want to emphasise that these changes will not mean that directors are free to disregard the consequences of their actions for the next six months," Mr Robertson says.

"Other protections in the Companies Act, such as those addressing serious breaches of the duty to act in good faith and punishing those who dishonestly incur debts, will remain in place."

Impacted businesses are urged to talk to their creditors and banks, as well as investigating the existing wage subsidy and business finance guarantee schemes.