As a corporate partner to the Chartered Institute of Credit Management, we recently recorded our first podcast where our business recovery partners, Bethan Evans and Simon Underwood, alongside business recovery senior manager, Giuseppe Parla, openly discussed their views on the current insolvency landscape, latest developments and what businesses should look out for and consider in the days and months ahead.

The 20-minute recording can be listened to in full by clicking here but, as a summary, please find below a brief overview of the main points discussed.

The current insolvency landscape

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Having recorded the biggest economic slump for 300 years at 9.9%, and with unemployment rising to 5.1%, it’s undoubtedly looking a little gloomy. However, this being said, the vaccine roll out is now underway, the nation has a ‘road map’ of brighter days to look forward to and the expected torrent of business failures that many of us thought we’d see has not yet occurred. The latest insolvency statistics have remained flat, largely due to the Government support measures available to businesses.

But will the numbers remain flat?

Government support measures, such as the furlough scheme, bounce back and business interruption loans, deferred payments of rates and crown debt, have been a critical lifeline for many businesses, greatly assisting them with their daily cash requirements. However, these measures have also assisted strategic adaptations for some, allowing them to ‘moth ball’ or ‘hibernate’ pending demand recovering and lockdowns easing. 

In addition to this, the Corporate Insolvency and Governance Act 2020 (CIGA 2020) introduced temporary measures to help businesses through the pandemic – such as restrictions on presenting winding up petitions and the suspension of wrongful trading. These are due to expire at the end of June – although these dates could still change. Winding up petitions have always been a driving force behind the insolvency statistics; however, the temporary suspension has limited businesses from using this tool to try and extract funds out of non-payers, hence attributing to the current flat trend in the insolvency statistics.

So, when the support measures diminish and the temporary insolvency measures lift, we can expect to see a rise in the number of insolvencies.

During our podcast, our experts candidly discuss the above landscape and their predictions on what the months ahead will look like for many businesses, as well as discussing:

  • The long-term impact on the most hard-hit sectors – such as hospitality, retail and leisure;
  • The use of Company Voluntary arrangements (CVAs) versus Administrations as insolvency processes;
  • The return of the Crown Preference and how this will impact the insolvency landscape; and
  • The impact of Covid on credit managers and what they should be considering over the year ahead.

To listen to the podcast in full, please press play below or download the podcast.

Menzies Business Recovery Team

During this difficult period all businesses are likely to feel the impact of Coronavirus. Our Business Recovery team are on hand to offer practical support and advice to help you proactively manage your situation. Remember early engagement is key so if you are at all in doubt about the future of your business, please do get in touch with us.

For further information on this podcast, or to discuss your specific circumstances with an insolvency practitioner, please contact our business recovery team here.

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