The UK government has announced changes to insolvency laws to prevent company directors being accused of wrongful trading.

UK business secretary Alok Sharma said the move would protect businesses unable to meet debts due to the impact of coronavirus from being forced to file for bankruptcy.

It allow directors to pay staff and suppliers even if there are fears the company could become insolvent.

Speaking at the daily Downing Street press conference on Saturday Sharma said the measures were aimed at allowing companies to “emerge intact the other side of the Covid-19 pandemic”.

Changes include a temporary moratorium for businesses undergoing a restructuring process, during which time they cannot be put into administration by creditors and will continue to be able to access all raw materials.

He said: “Our overriding objective is to help UK companies which need to undergo a financial rescue or restructuring process to keep trading.

“These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends, whilst ensuring creditors get the best return possible in the circumstances.”

The legislation, which will retrospectively apply from the beginning of March, would be introduced at the “earliest opportunity”.

The usual checks and balances, that help ensure directors fulfil their duties properly, will “remain in force”, he said.

Wrongful trading was introduced into UK insolvency law in 1986 and makes it an offence for a company director to continue to trade if they know the business is unable to avoid going into liquidation.