What happens next?
Is your business inherently viable but you’re struggling to plan for an uncertain future, amid spiralling costs?
None of us has a crystal ball but it’s fair to say that we are in the “eye of the storm” and many financial pundits fear the crisis will deepen before it improves.
As always the CBBR team wants to reassure people that there are options worth exploring - and early intervention can be key. We are here to help and it’s vital to reach out for professional advice and support as early as possible.
Described as a perfect storm, the current situation is down to a complex array of issues, including the Russian invasion of Ukraine, spiralling inflation, record fuel prices and climbing interest rates.
Combined with UK industrial action in some sectors, a recruitment crisis and rising staffing costs, it truly has become a perfect storm
On a positive note, Lloyds Bank UK Sector Tracker has just reported that some sectors did report increased output during June. However, businesses across the economy saw weaker demand, as inflation dampened customer spending.
Report highlights showed:
- 9 out of 14 sectors posted higher input in June - one more than during May.
- Input cost inflation slowed for the first time this year, but remained steep
- Demand weakened economy-wide, with nine sectors seeing new order volumes contract. This was the highest number since January 2021.
- Employment growth lost momentum, as future output expectations fell.
Read the full report at:
Majority of UK sectors show output up, despite weakening customer demand - Lloyds Banking Group plc
Please get in touch if you have concerns, for a free, no-obligation initial chat. It’s also worth checking out the blog that we published in November, which gives an overview of options available:
Don’t delay – prompt professional advice is vital – CB Business Recovery (cb-br.co.uk)
Complying with the letter of the law
Are insolvency practitioners highly regulated and vetted?
The answer is an unequivocal “yes” - and rightly so.
This question crops up from time to time and was triggered again recently, when a ban was handed out to an unlicensed practitioner. It’s not for me to comment on individual cases, but you can read more at:
Maximum 15-year ban for fake insolvency practitioner - GOV.UK (www.gov.uk)
Looking at the wider issue, the industry is regulated carefully and insolvency practitioners are trained to industry standards. In the same way that you’d confirm an accountant or solicitor’s credentials, it’s always a good idea to check us out!
A good starting place is the Insolvency Practitioners’ Association (IPA), of which I am a member. This organisation regulates individuals under insolvency and anti-money laundering laws and works to raise professional standards through training, benchmarking, networking and best practice sharing.
The IPA was formed in 1961 as a discussion group of accountants specialising in insolvency. Over the early years, it grew in numbers and stature as the body of the insolvency profession. It was incorporated under its present name in 1973.
During the 1970s and early 1980s, as insolvencies increased and more people were appointed as as trustees and liquidators, concerns emerged about the activities of a small number of them. In turn, this impacted on the profession and its reputation.
Those concerns were looked into by a Government Committee chaired by Sir Kenneth Cork as part of a wide ranging review of the insolvency framework; and it led to a recommendation, enacted in the Insolvency Act 1986, for a statutory authorisation regime for practitioners.
For more information, and details of qualifications and professional training, please see:
About the IPA | Insolvency Practitioners Association (insolvency-practitioners.org.uk)
If you have any queries about this blog, or require professional advice, please contact me via phone or email:
Contact – CB Business Recovery (cb-br.co.uk)
Bouncing back or struggling to repay Government loans?
Government loan schemes proved a vital lifeline for some businesses earlier in the pandemic but what happens if you can’t afford the repayments?
As with most things, it’s vital to take professional advice as soon as possible, rather than simply hoping for the best.
Although there are signs of economic recovery, some businesses are still reporting challenging trading conditions. As a result, reduced cash-flow means they are now struggling to repay Corona Business Interruption Loans (CBILs) and Bounce Back Loans (BBLs)*
Some sectors - including hospitality, leisure and tourism - are still seeing activity below pre-Covid levels. Others are struggling with new challenges including labour shortages, the energy crisis and sharp increases in costs of raw materials.
Both BBLs and CBILs involved commercial banks distributing funds, with the Government acting as the guarantor. Their respective terms and conditions are different though. Please make sure you read your agreement carefully and act now if you’re unable to meet instalments.
Firstly, if a company can’t repay a Bounce Back Loan it may be a sign of insolvency. Speak to us as soon as practical so we can explore whether you can restructure and recover.
Secondly, there may be opportunities to make interest-only payments, for a limited time, or extend the term of the loan.
If the company is not viable and liquidation is the only option, a Bounce Back Loan and other company debts will likely be written off. The situation is not so clear-cut with CBILs, due to personal liability issues.
If the loan was for over £250,000, lenders were able to request personal guarantees. However, these were limited in terms of what could be recovered from company directors. Directors’ liability is capped at 20 percent of the debt.
Keen to learn more about the best way forward? Please contact us for free, no obligation advice if you can’t pay either of these loans or anticipate problems in the near future:
Contact – CB Business Recovery (cb-br.co.uk)
Don't delay - prompt professional advice is vital
Is your business experiencing financial issues? Is it inherently viable but unlikely to survive in its current form?
Acting sooner, rather than later, is always the best approach - particularly as demand for professional support is likely to soar as Government restrictions on insolvency procedures continue to be phased out.
That’s the message from CBBR’s Chris Brooksbank as insolvency practitioners, nationally, prepare for “substantial and sustained demand” in 2022.
Chris said: “Businesses that are fundamentally viable have faced major challenges during the pandemic and successive lockdowns, despite Government support. Some are now burdened by levels of debt that may make survival extremely difficult and increasingly unlikely.
“Some sectors have been particularly hard hit, including the leisure and hospitality industries. We want to reassure people that there are options worth exploring and to reach out for professional help and support early on.”
Chris’s advice follows the Government decision to phase out emergency measures introduced by the Government's Corporate Insolvency and Governance Act 2020. These have been replaced by temporary protections for those still recovering financially.
The new temporary restrictions remain in force until March 31st 2022, covering England, Scotland and Wales. Read more in last month’s blog at:
Government throws new lifeline to small businesses – CB Business Recovery (cb-br.co.uk)
Chris added, “Moving ahead into 2022, firms will increasingly look to restructuring specialists for help. For example, we may be able to help with a Company Voluntary Arrangement (CVA) or administration. While neither option is a perfect solution, it can help to ensure that a fundamentally viable business will survive rather than collapse.
“We can also advise businesses with a significant debt burden, that are keen to avoid insolvency processes. Options can include a Formal Time to Pay proposal to HMRC; considering debt re-financing; or capital raising.
“In summary, we are anticipating a major spike in demand over the coming months, so please don’t hesitate to act quickly if you need help. This will help ensure that you’re at the head of the queue, rather than facing long and unavoidable delays.
“Please do get in touch, for an informal, no-obligation discussion if you'd like to explore the options available.”
Ends….
Business marks first anniversary by reporting buoyant trading position
A Yorkshire-based business recovery firm is reporting strong trading figures after celebrating its first anniversary.
CB Business Recovery was established last Autumn in the height of the pandemic to assist companies battling for survival during successive Lockdowns and beyond.
Just over a year later, they have recruited a new member of staff and are now planning for the coming year as the UK continues to adjust to new trading conditions.
Speaking after the Government introduced new, temporary protections earlier this month for those still recovering financially, Chris Brooksbank said:
“Given that in general the insolvency profession has been stagnant, CBBR has outperformed its expectations resulting in an excellent first year both financially and statistically.
“The Government used emergency legislation to assist struggling businesses and, as a result, legal proceedings saw a lull.
“There are fresh concerns that we may see an anticipated spike over the next two years, as the restrictions, and assistance, lift.
“Most sectors have been impacted but hospitality and leisure have been among those hardest hit. We will be working closely with all interested parties to ensure that we are able to give the very best professional advice."
Learn more by reading CB Business Recovery’s latest blog:
http://www.cb-br.co.uk/government-throws-new-lifeline-to-small-businesses/
Ends….
Note to editors: Chris Brooksbank is a Licensed Insolvency Practitioner, specialising in all aspects of corporate, personal insolvency and business recovery in a career spanning 30 years.
Government throws new lifeline to small businesses
Emergency measures introduced by the Government to protect companies during the pandemic have now made way for new, temporary protections for those still recovering financially.
These are aimed at helping smaller companies and commercial tenants to recover before creditors can start winding-up procedures.
Ministers hope this will offer support to high streets, plus hard-hit sectors including hospitality and leisure as more normal trading conditions continue to return.
The legislation that ceased on October 1st was laid down by the Corporate Insolvency and Governance Act 2020 and ensured viable businesses were not forced into insolvency during successive lockdowns.
The new legislation remains in force until March 31st 2022, covering England, Scotland and Wales. These measures will:
- Raise the current debt threshold for a winding-up petition to £10,000 or more, protecting small businesses from creditors insisting on the payment of relatively small debts
- Require creditors to seek repayment proposals from debtor businesses, allowing them 21 days to respond before winding-up action can commence.
In the meantime, the Government has emphasised that businesses should continue to pay contractual rents wherever possible. Restrictions remain in place to prevent commercial landlords from presenting winding-up petitions against limited companies to recover rent arrears.
This supports an earlier announcement that commercial tenants will continue to be protected from eviction until March 31st, 2022. These timescales will enable the Government to implement a rent arbitration scheme to deal with commercial rent debt, accrued during the pandemic.
Licensed Insolvency Practitioner and CBBR Director Chris Brooksbank said: "Everyone here supports this proactive approach aimed at keeping viable businesses afloat and we are available to offer clarity and more detail as required.
"Our experienced team can provide guidance concerning insolvency, bankruptcy and restructuring. Please get in touch for an initial, no -obligation chat. We look forward to hearing from you."