It looks like there could be an unprecedented amount of insolvency cases on the horizon here in Northern Ireland, as the UK Government begins to withdraw some of the support measures that are at present in place. From July 1st it is likely that the government will start to reintroduce rules regarding the insolvency of businesses that had remained suspended during the pandemic.
Many Businesses Are On A Knife Edge
Many businesses have been living on grants and other types of financial assistance that have been available, but once these end the harsh reality of keeping afloat will without doubt tip many into becoming insolvent.
Speaking to the Derry Journal Darren Bowman, Business Recovery and Insolvency Partner at Baker Tilly Mooney Moore, said: “Many businesses across Northern Ireland encountered difficulties during the pandemic, accruing debt and relying on government support measures to stay solvent. These may have included the furlough scheme and derogations from usual insolvency-related rules and procedures.
Be Aware Of The Early Indicators
“The unfortunate reality is that many of these businesses may find themselves facing insolvency, as support measures start to be withdrawn. It is essential for businesses to monitor their own performance and be aware of the early indicators of a pending insolvency. It is also critically important that businesses monitor their trading relationships to forecast any challenges for supply chain partners.”
“The pandemic has resulted in many businesses facing financial difficulties for the first time. It is essential that Directors are aware of the key warning signs that can lead to real financial problems, or even formal insolvency. With the current easing of lockdown, many businesses may need additional lending to finance reopening, intensifying financial pressures on already distressed businesses, especially if banks refuse loans or require current facilities to be reduced.
Advocate Seeking Professional Advice
“Directors have a responsibility to minimise losses to creditors, so we would always advocate seeking professional advice sooner rather than later. Where businesses are underperforming, or are financially stressed, a good professional partner can implement solutions that will preserve business value and restore viability for owners and stakeholders. Prompt action is essential to enable a business to establish if appropriate restructuring, rescue and turnaround techniques such as a Company Voluntary Arrangement, administration or refinance are viable options.”
If you are a business owner and you think you would benefit from some professional advice regarding the above please contact our offices here in Armagh at the earliest opportunity on 028 3752 2909.