Businesses across the spectrum are experiencing significant disruptions and challenges to their operations as a result of the pandemic.
The Government has provided support in a number of ways to keep businesses going. These include:
- deferral of VAT
- deferral of income tax payments
- government backed and guaranteed loans (CBILS)
- rate relief for the retail, hospitality and leisure industry
- cash grants for small businesses
- the Coronavirus Retention Scheme – furlough leave for employees.
These measures are no doubt a great help to struggling businesses but they may not be sufficient to stave off insolvency, and a requirement to call in an administrator or liquidator. However, it is thought that further measures are about to be introduced by the government which will temporarily relax some of the more draconian regulatory provisions as they apply to businesses in a position where they are unable to continue trading. These include:
- a review of the rules of wrongful trading (under which directors can incur a personal liability) to allow directors to continue with business as usual to the extent possible
- a moratorium for companies giving them breathing space from creditors enforcing their debts for a period of time whilst they seek a rescue or restructure
- a new restructuring plan binding creditors to that plan
- a protocol for administrators to allow for a “debtor in possession” trading administration; and
- further rules around when and how a winding up petition might be presented.
Whilst we are waiting for the detailed legislation to be introduced in order to implement these measures, they will nonetheless be a welcome relief for businesses facing unparalleled difficulty.
Edwin Coe has put together a multi-specialist task force to provide advice to businesses in this situation and for taking advantage of these new insolvency relief measures.
This will include:
- tailored advice based on the new legislation when it is published
- work around plans including debt/equity swaps, restructurings, asset realisations, financing and other fund raising opportunities (including potential introductions to institutions seeking investment opportunities)
- access to our panel of Insolvency Practitioners
- employment advice in relation to the work force
- strategic advice relating to the property concerns of a client’s business’
- utilisation of procedures to keep businesses afloat including arrangements with creditors.
For an initial consultation without charge please contact any of the following:
Simeon Gilchrist – Partner, Restructuring & Insolvency
Ali Zaidi – Head of Litigation & Insolvency
Russel Shear – Head of Corporate
Joanne Osborne – Head of Property Litigation
Linky Trott – Head of Employment.
We will continue to monitor the situation and provide further updates as they become available. The guidance is changing almost daily and as such it is important to monitor updates as further clarification is published.
Please visit our Covid-19 Resource Centre for the most up to date information.