Newsletter July 2021 - Licensed Insolvency Practitioners

Bounce Back Loans, What Happens Next?

We all know how easily Bounce Back Loans were granted to a number of businesses; businesses that, under different circumstances, would not have been able to provide evidence of serviceability of the loans. Concerns have been raised about the likely level of default on these loans for some time.

We recently attended a webinar produced by The Association of Business Recovery Professionals discussing Bounce Back Loans where a representative from The British Bank was on the panel. One of the things he discussed was the attitude of the Banks if customers begin to default on the terms of the loan.

The key driver to the Banks will be one of customer retention and as long as customers are talking to the Bank, time will be given for them to come up with repayment proposals. Effectively, this could take as long as 12 months and, even if no solution is found, the Banks will still not consider pushing the customer into insolvency.

It would also appear that HM Revenue & Customs will have a similar relaxed attitude when businesses do not pay their taxes or adhere to time to pay agreements.

The economic impact of the pandemic therefore continues to be managed in an attempt to avoid a massive spike in insolvencies with resulting redundancies. Creditors will still be unable to issue winding up petitions until 1 October 2021 at the earliest. Furlough will remain for the next 3 months.

Directors of struggling companies therefore have all the support that they can get to trade through this difficult period. However, directors need to be realistic in their ability to turn things around. If they have any doubts, then they should be seeking professional advice.

We are happy to provide initial free, confidential and no obligation advice to any of your clients who have concerns about their business.

Are Your Clients Asking You to Strike Off Their company? Are You Aware of the New legislation?

The Government is continuing to introduce the Ratings (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill which had its second reading earlier this week.

If passed, the Insolvency Service will be given powers to investigate directors of companies that have been dissolved, acting as a strong deterrent against the misuse of the dissolution process. If wrongdoing is found, directors can face sanctions including a ban of up to 15 years.

The measures will be retrospective and will also enable the Insolvency Service to challenge Directors who have inappropriately wound-up companies that have benefitted from Bounce Back Loans.

This is an additional measure to reduce the risk of CBILS and BBLS loan fraud. Recent statistics showed that the number of company strike-offs from Companies House increased to 39,601 in the first quarter of 2021, compared to just 4,965 in the same quarter in 2020. This is an increase of almost 750%!

However, we are also seeing a trend of dissolution applications being suspended or discontinued so we believe that preventative steps are already being taken ahead of the new law being introduced.

If you have any clients that are considering striking off their company when it has liabilities it cannot pay, then they should place the company into liquidation. We offer a low-cost fixed fee liquidation to small businesses that have very little or no assets and very few creditors. This fixed fee is £3,000 to include disbursements and VAT.

R3 Issue “Get Back to Business” Guide

The COVID-19 pandemic has had a huge impact on the economy. Businesses from across every sector have had to respond to an upheaval in trading, change their staffing and working arrangements, and deal with the sheer uncertainty of operating in the context of a global pandemic.

For many directors and business owners, this set of circumstances has pushed their businesses to the edge of viability – many have already, sadly, reached the end of the road.

R3 have issued a guide designed to assist businesses facing financial distress with the advice that they should seek guidance as early as possible.

The guide provides a one-stop shop to the main options that are available to resolve corporate financial distress;

explains how the insolvency and restructuring framework and profession can help to rescue viable businesses, save jobs, and repay creditors;
helps to point directors to qualified and regulated sources of this advice;
sets out the duties and responsibilities of company directors and the importance of meeting them

Please click this link to go to R3’s publication “Get Back to Business: A guide to dealing with corporate financial distress”

Bounce Back Loans, What Happens Next?

Are Your Clients Asking You to Strike Off Their company? Are You Aware of the New legislation?

R3 Issue “Get Back to Business” Guide

News…

Newsletter June 2021

Return of the Zombies?

Light at the End of the Tunnel?

Business Survival Solutions for Sole Traders

Directors’ Duties in Insolvency

FSB Calls for Greater Support

Lockdown 3: Behind the Statistics

Further Growth in MVLs

Furlough Extension: Key Features