New Insolvency Legislation to assist struggling businesses through COVID-19

New Law to help businesses

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As the Government eases the restrictions on businesses and the country starts to return to work, directors of UK businesses up and down the length and breadth of Great Britain are feeling the pressure and affects on their companies, redirecting cash flow after such a lengthy lockdown.

We are receiving numerous enquires from directors who feel they’re drowning under paperwork and pressure from creditors with no apparent lifebuoy to save them.

There is light at the end of the tunnel in the form of new Insolvency legislation.

With the introduction of the Corporate Insolvency and Governance Bill, which is aimed at helping companies survive (protecting jobs and supporting the UK economy), there are added ways to protect your business from failing but you will need to take action fast.

Some of the measures will only apply for an initial temporary period, but the UK parliament retains the power to extend these periods, if necessary. Included within the new legislation are:

  • Company Moratorium – Insolvent companies or companies that are likely to become insolvent can obtain a 20 business day moratorium period which will allow viable businesses time to restructure or seek new investment free from creditor action.
  • Statutory Demands and Petitions – Temporary provisions to restrict statutory demands and winding up petitions issued against companies during the pandemic where the debt is unpaid for reasons relating to COVID-19.
  • Suspension of Wrongful Trading – The Bill will temporarily suspend such wrongful trading provisions for a period of four months with retrospective effect from 1 March 2020 to 30 June 2020.

 
The complexities of this new legislation are far and wide and if there is a message/checklist that we wish all directors facing financial pressure would take away it’s…

  • Please, please, please take early action at the first signs of financial distress.
  • Talk to your accountant or a qualified Licensed Insolvency practitioner (not the bloke from the pub who professes to be an expert about anything and everything. He isn’t!).
  • Early action is your bedfellow and increases the options available to the directors of the company thereby improving the chances of their company surviving which might otherwise be lost.

 
At My Insolvency, we pride ourselves in truly understanding the challenges directors face in business and by taking the necessary time to review the entire situation. With the Board, we look to understand:

  • The short and medium term pressures you’re facing;
  • What your aspirations are for the future of your business;
  • And your exit strategy

 
If there’s an elephant in the room, then we are not afraid to point it out and by working with the management team, we produce a plan of action and workable strategy that maximises the available outcomes for the stakeholders.

If you are a director of a company that is struggling financially, contact our specialist team today on 0800 009 6106 or hello@myinsolvency.co.uk.

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