ILR on expired passport

Hi, I am currently in a tricky situation. I am Brit via tier2 general - ILR route. My family members are eligible for ILR. I have submitted ILR application for my wife and kids online and paid the fees. At the time of application submission my wife had around 1 month 20 days for expiry of her passport. Due to this Covid lockdown, the biometric date has been postponed and in mean time my wife’s passport has expired. Just before the lockdown I had applied to renew the passport in tatkal however on the day of appointment VFS mentioned that they are not taking any new applications till further notice. Also I did contact HCI london for any information regarding resumption of the passport renewal service earlier this month which was replied with uncertainty. Since the lockdown in UK is easing, If my application is processed will the passport be considered as on application date (valid state) as opposed to current expired state ?

key dates for my situation are as given below:

date Activity
14 March 2020 — application submitted/payed
19 march 2020 — VFS appointment for passport renewal but application not accepted due to lockdown
16 April 2020 — appointment scheduled for biometric but postponed indefinitely
5 may 2020 — passport expired
19 July 2020 — tier 2 general visa expires

any clarity/guidance on this will greatly help me to decide how to proceed.
Thanks
jon

Application is only processed and decided after they attend their biometrics appointment. You should book their Biometrics appointment after she gets her new passport as they need a valid passport.