Hearings for creditor led winding-up petitions of businesses, which were suspended during the Covid-19 pandemic, have restarted once more, which in all probability will lead to a rise in insolvencies across Northern Ireland.
Creditors can make the decision that the only way they can receive any money they are owed back from a business is apply to the courts to close down the company.
Only 2 Companies Wound Up In Court In January & February
Gary Bonner, from accountancy and business consultancy firm Gildernew & Co, is quoted on this subject in a recent article on the BBC News website, where he says:
“There are undoubtedly companies out there who normally would be wound up at this stage,” he explained.
“In January and February this year there were only two companies wound up in court and they would’ve been director-led winding ups.
“In the same period pre-Covid there were 39 companies wound up in January and February 2020. So we would expect those numbers to start normalising and coming back up to the high end.”
Mr Bonner said HMRC tends to be “the most prolific petitioning creditor”.
He added: “I think most of the petitions that we’re going to see are going to be HMRC.
“Getting a court judgement can be a slow process, you’re having to go to court, and the creditor may try to defend that court process.
“It won’t be an automatic, so the courts will not be seeing those creditors for a while but they will be seeing HMRC.”
Businesses Should Seek Expert Advice If They Are Struggling
And in the same article insolvency practitioner Darren Bowman, of Baker Tilly Mooney Moore, said business owners should look at the flow of cash within their business, investigate their liabilities and seek expert advice if they are struggling.
“As creditors reclaim the mechanism of winding-up petitions, there are fewer safeguards and protections in place before the initiation of formal insolvency proceedings,” he said.
“That said, many rescue and recovery options are available including Company Voluntary Arrangements, which are a credible and formal way to getting a business back on track while repaying creditors.”
If you are running or managing a business that is having serious cash flow problems you definitely need to seek expert advice before the situation deteriorates any further. We can certainly help you in this respect, please give our offices a call at the earliest opportunity by ringing 028 3752 2909.