There’s a lot of restructuring of businesses at present taking place as they right-size for the post-pandemic lockdown. Once the government’s economic support measures taper off it’s a sad likelihood that more business than usual will go into administration as they feel the pinch, writes David Little, one of the Partners in our Restructuring and Rescue team.
According to the accountants’ magazine Economia as of February 2021, £53.8bn has been claimed under the Coronavirus Job Retention Scheme (CJRS), furloughing 11.2m people. Over 1.5m businesses have received loans worth over £74bn, including future fund loans, business interruption schemes and bounce back loans.
There is of course always a human cost to a company that’s facing closure.
Greg Palfrey, Partner and National Head of Restructuring & Recovery Services at Smith & Williamson, mirrors precisely my own thoughts, “Directors tend to come to us too late when there is no option but financial collapse.
“People don’t want to admit there’s a major problem outwardly, so they put it off. Yet the earlier insolvency practitioners go in, usually the more options there are. Taking the right advice and following that advice from an insolvency practitioner means companies are better protected. However, IPs do not have magic wands and can only deal with what they are given.
“If you’ve not got a lot of time, yet you’ve got to go through a 60-page report, that’s not going to help with decision-making or stress levels,” Palfrey points out. “Our role has been supporting clients to make the right decisions for their company by producing with the relevant available information a concise analysis of the issues and a set of pragmatic options for the company to be able to make as good a decision as time and circumstances allow.”
“We have a great and wide toolkit to allow us to help companies where advice is sought in a timely manner, and there is a business to rescue. We must be doing something right for countries such as Singapore, India, Cyprus and Germany to copy many of our insolvency tools.”
David Little is a Partner in our Corporate & Commercial team. Should you require any further advice or assistance, please contact us at email@example.com
The above is accurate as at 08 April 2021. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.