As we are all aware, many businesses, and individuals, are currently experiencing significant financial difficulty due to the pandemic – a situation unlikely to improve significantly over the coming months. Many businesses that were viable pre-pandemic are now facing serious questions about their viability going forward, as government support schemes end. In practical terms, very few businesses will be able to survive such a long period with very little or no cash coming into the business during lockdown, with liabilities accruing at the same time, without some form of restructuring. It is clear that restructuring will play an increasingly important role in enabling businesses to deal with this situation in the months ahead – whether informally in terms of discussions with creditors to reschedule debts, or more formally if creditors are pressing for payment. Many directors and business owners will unfortunately be facing possible insolvency for the first time, but failures can be averted if advice is taken early enough. New restructuring tools in the Corporate Insolvency and Governance Act 2020 Against this backdrop, there have also been a series of significant temporary and permanent legislative changes to the UK’s insolvency and restructuring framework which directors need to be aware of, as they have been introduced to provide the legal tools to assist with the rescue of as many businesses as possible. R3, the trade association for the insolvency and restructuring profession, promotes the importance of seeking early advice and has offered to organise a series of webinars to explain how restructuring and insolvency processes can work, under their ‘Back to Business UK’ campaign. Importantly, these processes do not necessarily mean the end of a business and can often facilitate business rescue, particularly if the advice is taken before cash runs out and there is an opportunity to speak to creditors to agree a restructure of the business. Window of opportunity to take early advice At the moment, with a temporary ban on the presenting of winding-up petitions, and banks generally forbearing and not seeking to enforce defaults on lending, there is time to take advice on a rescue. The temporary measures have recently been extended, the most prominent until the end of December, but after that time companies are likely to face increased creditor pressure. Getting ‘Back to Business’: Restructure debt, restore businesses, save jobs We are therefore working with R3 on a series of one-hour webinars aimed at directors and business owners which would aim to: • To provide an overview and explanation of all of the key restructuring and insolvency procedures, how they work and how they can help; • A summary of the new Corporate Insolvency and Governance Act 2020 measures and what they mean for business rescue; • Explain the importance of seeking early advice, and how the earlier advice is sought the more options are available to resolve financial distress; • Explain what an insolvency practitioner is, and what do they do; how to tell if someone is qualified and regulated; how to find a suitable source of advice; etc.
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