An IT services company has a number of significant contracts in varying stages of completion. Its pricing for a number of projects has squeezed its margins and impacted on its cash flow. This is creating financial difficulties for the company, which is currently trading with marginal solvency. A bank has been providing ongoing funding and holds a security interest over current and future assets. This has been registered on the Personal Property Securities Register. Banking covenants appear to have been breached, although this cannot be verified as the company's financial accounts are currently in the process of being restated. This is due to errors in classifying revenue, in breach of accounting rules, together with other compliance failings regarding its financial records. The board has decided that its best option is to keep trading with the hope that the company will overcome its current difficulties. Two new, potentially lucrative, high risk contacts are about to be signed off by the board. Majority shareholders are unhappy with this approach. They want to see some form of Companies Act intervention to allow the company to work with creditors to find a long term solution to the company's current financial problems. Directors are considering this option. Meanwhile, the bank has signalled that it is about to exercise its rights under the security interest, and major creditors are threatening legal action for non-payment of debts owed to them.

Required:

1. Assume that the problems the IT company is facing have occurred in the period April - to June 2020.

Briefly discuss the Covid 19 legal position of the directors regarding their potential liability in the following situations: o the marginal solvency of the company and the non-payment of debts to creditors o the two new contracts signed off by the directors o the problems with the accounting records and financial statements