Another last chance – temporary insolvency restrictions extended again
With homeschooling becoming second nature to a lot of us this year, one of the fun things has been rediscovering some of the classic old stories we used to read when we were kids.
Not just the modern tales like Gruffalo and Zog the Dragon, but some of the older ones like The Boy Who Cried Wolf.
The thing that strikes you most in that story is the amazing forbearance of the townspeople who keep running to his rescue several times before the unfortunate end.
It perfectly illustrates that while there are always opportunities to change course, they are finite and eventually one will be the last chance.
So it is with the announcement that the temporary measures brought in by the Corporate Insolvency and Governance (CIG) Act are being extended once again and are now set to expire on June 30th 2021.
These measures include:-
- Statutory demands and winding up petitions will continue to be restricted (with one exception)
- Temporary suspension of personal liability arising from wrongful trading for directors continues – covering directors who continue to trade a company through the pandemic with the uncertainty that the company may not be able to avoid insolvency in the future
- Termination clauses remain prohibited – this stops suppliers from ceasing their supply or asking for additional payments while a company is going through an administration or restructuring process. Smaller suppliers will continue to remain exempt from the obligation to supply until the measure lapses.
- Entry requirements for the new insolvency moratorium procedure will continue to be relaxed until the new end date along with the extension of temporary moratorium rules.
Chris Horner, Insolvency Director with Business Rescue Expert, thinks this is potentially all good news for company directors and owners of businesses that face an uncertain future.
He said: “A lot of small businesses and larger companies will welcome the fact that these protections and support won’t be disappearing in a couple of weeks.
“Crucially it buys them more time to plan and execute their recovery strategy for when the measures do eventually end – which they will eventually.
“We don’t exactly know how the economy will react and function when the restrictions begin to be lifted and physical stores can reopen again so there could very well be a continued depression of activity after external support is withdrawn.
“Getting professional advice and acting on it – making the key decisions that will be best for your business and staff – now will give those companies a valuable head start in the race to reopen.”
“Crying wolf may have been the boy’s undoing but the true irony was the wolves were always lurking nearby” – Wes Fesler
Thinking that how things are right now will always be is an easy mistake to make. We’ve probably all mistaken hope for judgement and been taken by surprise.
The extension of these temporary measures once more is both a gift and a warning.
A gift in giving us time and opportunity to start building a recovery plan beginning with a free initial consultation with one of our experienced advisors.
They will learn what circumstances your business is in and help you understand what your options are to revive and hopefully restore your firm’s strength to where it was before we’d even heard of Covid-19.
The warning reminds us that there are always wolves outside and not acting while you have the chance is all the invitation they’d need.