During the pandemic many businesses across Northern Ireland took out loans or deferred payments they owed so that they could survive. Lately the Government and HMRC have been chasing down some of these debts, such as bounce back loans, leaving some of these companies on the brink of administration.
Huge Increase In Number Of Businesses In Critical Financial Distress
A report by business recovery and advisory firm Begbie’s Traynor has found that there has been a 36% increase in the number of businesses rated as being in critical financial distress in the last 3 months of 2022 compared to the previous year. This has been an ongoing situation over the last few quarters with the hospitality industry showing particular signs of distress, due to the fact that they suffered more than most sectors during the Covid outbreak and they are now having to deal with soaring energy bills on top.
Company Bosses Having To Dig Deep To Keep Battling On
Julie Palmer, a partner at Begbies Traynor, is quoted in an article in the Belfast Telegraph as saying:
“We’re taking calls from company bosses who are having trouble digging deep enough to keep battling on.
“They are already having to pay back the support they took to get through Covid and, anecdotally, we are hearing that both the Government and HMRC are becoming more determined in pursuing debts, while other creditors are increasingly turning to the law to recover their debts.”
Another issue has been a rise in the number of county court judgements (CCJs), which have increased over 50% in the last quarter of 2022 compared to the last quarter the previous year.
Ms Palmer added in the article that: “Considering what directors of businesses are facing, I’m very surprised that we are not seeing more of them finally giving up and shutting down.
“That so many are holding on in the face of such strain is a testament to their abilities to manage their way through incredibly tough times and a seemingly endless run of fresh hurdles.”
It would certainly help if the Government, along with HMRC and other debt agencies, showed a little more compassion and patience at this time and waited for conditions to improve for businesses, who have been through so much in the last 2 years or so. For many, having to pay back these loans could well be the tipping point from which they never recover and that would be a real tragedy.
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