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Dentist
An equal amount of coverage and adulation has been given to the tireless NHS workers and GP’s who’ve stepped up to face a once-in-a generation challenge with the same selfless professionalism and dedication to duty they’re renowned for. 
 
But there’s one branch of the health services that experienced a very different year and that’s dentists. 
 
From a public health point of view since March there have been collectively 19 million fewer dental treatments in England alone compared to 2019. 
 
Research from the British Dental Association (BDA) warn that not only are practices operating at a fraction of their capacity during the pandemic, limited to emergency treatment in many cases, but that hundreds of practices could be forced to close within the next year without extra financial support. 
 
During September and October 2020, dental practices were operating at a third of last year’s level. 
 
The BDA conducted interviews with 1,337 dental practitioners and more than half said they would not be financially viable a year from now unless they were given extra support. 
 
The oral health implications are also stark with a combination of dentists closing and less patients being seen. 
 
Sam Shah, group clinical director for East Village Dental, a group of six practices in the south of England said: “At least two of my surgeries, both in deprived communities with high levels of need, are at risk of closing within the next 12 months if the government doesn’t intervene.
 
“These communities have a lack of access to any other NHS dental services. We’ve seen an increase in the number of people using painkillers to manage dental pain - and that’s led to an increase in the number of people presenting at A&E after inadvertently overdosing on paracetamol or ibuprofen.”
 
Dentist insolvency matters
 
Sadly because of the ongoing uncertainty around restrictions on dental reopening for non-emergency services, several are facing severe financial difficulties and should be considering options to help alleviate these. 
 
Moving quickly to get professional advice and then choosing to pursue a CVA or administration could be the best solution for a dental practice that is hoping to reopen but has no clear pathway to welcoming customers back into the surgery. 
 
There was initially some confusion around whether insolvency could affect a dentist’s professional registration or even their future ability to hold NHS treatment contracts. 
 
Fortunately the answer is no, it won’t.
 
Insolvency proceedings do not affect a dentist's registration with the General Dental Council (GDC) or their membership of the British Dental Association (BDA) in any way. 
 
Most dentists work with a mix of private and NHS patients so there’s no reason why dentists working through formal insolvency proceedings can’t carry on private dentistry work. 
 
If they enter a CVA, administration or CIGA restructuring there’s no requirement for dentists to inform customers. They do have to notify the NHS if they hold treatment contracts and enter any formal insolvency proceedings but there’s no obligation on the NHS to terminate contracts in these circumstances.
 
It’s a testament to the care and professionalism the profession is noted for that they consider their future standing so carefully and we’re happy to set any of their worries aside.
 
If you’re a dentist then the thing you’d probably like more than anything else this year is some certainty about your future. 
 
When will you be able to see non-emergency patients again? What restrictions will remain if you can? Will it be governed by which area of the country I like in when tiered lockdowns return again?
 
Good advice can bring certainty of purpose and action too. 
 
Get in touch with us today and we’ll arrange a free initial consultation which can be held virtually at a time convenient to you. 
 
We’ll discuss the circumstances of you and your practice and be able to summarise what your immediate options are and what action you can take now while waiting for bigger decisions to be made. 
 
This could be the first step toward a brighter future so when you can begin practice again, you could already have made some changes to protect your business and livelihood in the meantime.

two paths
The three most important additions introduced were:-
 

 
We’ve talked about the insolvency moratorium at length elsewhere but it’s a positive development that can only help companies by giving them breathing space to restructure their businesses while legally protected from creditor actions. 
 
Ipso Facto clauses used to allow suppliers to terminate contracts for goods and services if the company underwent an insolvency event but this orders them to keep the supply going which will give the company a better chance of trading their way back to profitability. 
 
The restructuring plan procedure, which some learned writers are referring to as the “super-scheme”, should be better known than it already is because it’s going to have a big impact in 2021 and beyond.
 
It gives professional insolvency practitioners additional tools to help protect businesses looking to restructure but with one important new power modelled on the American style “Chapter 11” bankruptcy process.
 
Whilst an insolvency practitioner does not take an active appointment on the matter, assistance from such professionals, like those at business rescue expert, is key in having these arrangements approved.
 
It runs parallel to the existing Scheme of Arrangement process, where a court can oversee corporate restructuring efforts without the business having to enter insolvency or be sold as a result. 
 
Whilst, like a CVA, 75% of creditors in value are required to approve the restructuring plan, if the threshold is not met, dissenting creditors can be legally bound to accept the restructuring plan by the court if it’s found to be fair and equitable to do so. The downside to this however, due to the costs of going to court, is the process is significantly more expensive to implement than a CVA.
 
If it can be proven that none of the creditors would be any worse off if the plan didn’t go ahead and that the plan is indeed realistic. By worse off, this is often compared to the alternative, which is often the outcome in liquidation or administration, meaning there is a wide discretion for the plan to be approved, but again the involvement of an insolvency practitioner is likely to be needed to make such a certification.
 
The CIGA Restructuring Plan Application Process
 
A CIGA restructuring plan can be applied for with or without the use of the new insolvency moratorium
 
The plan will generally take time to fully implement so the moratorium can provide the necessary breathing space to allow the restructuring plan to be considered. 
 
Because court hearings are required as well as a creditors meeting, the plan could easily take two to three months to implement, compared to the average of four to six weeks that a CVA would take.
 
How it works
 

 
Crown Preference = CIGA > CVA ?
 
There's another important calculation that businesses considering restructuring need to take into account - the return of Crown Preference.
 
We’ve previously written about how HMRC’s newly restored priority in the hierarchy of creditors will cause unintended effects throughout the economy. 
 
Practically this means that some companies that would previously have been looking at a CVA to restructure their business and readjust course will now have to enter administration or even liquidation in order to satisfy this new aggressive creditor at the expense of others who might have been prepared to back a CVA and would see little return, if any from an insolvency.
 
As a result of the return of crown preference, HMRC will mop up the first dividends issued under a CVA. With HMRC as an unsecured creditor, all creditors may stand to receive 60p/£ from the arrangement, where with the return of crown preference, HMRC may receive 100p/£, with the remaining unsecured creditors only then receiving 10p/£ after HMRC have been paid in full.
 
Where this may be too much for creditors to accept under a CVA, if it is realistically the best outcome, the alternative being liquidation, the CIGA restructuring plan would still bind creditors to accept the arrangement, even if they oppose it en-mass.
 
The good news is that you’ve got a professional friend in your corner at exactly the time you need them. 
 
Business Rescue Expert provides a free initial consultation for any business to discuss what problems they’re facing right now and how they fix them in the short, medium and long term. 
 
Get in touch with us to arrange one and we can outline all the options available to make sure that no matter how rough 2020 was, you can begin 2021 with hope.

Business Rescue Expert is part of Robson Scott Associates Limited, a limited company registered in England and Wales No. 05331812, a leading independent insolvency practice, specialising in business rescue advice. The company holds professional indemnity insurance and complies with the EU Services Directive. Christopher Horner (IP no 16150) is licenced by the Insolvency Practitioners Association

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