The regional chair of insolvency and restructuring trade body R3 is urging directors of Covid-hit North East firms to use the time provided by the extension of temporary insolvency measures to plan for the future.
The Government has extended a number of measures brought in by the Corporate Insolvency and Governance (CIG) Act which were due to expire on April 30 until the end of June.
These include relaxing some of the entry requirements for the new moratorium procedure, which gives struggling companies a 20-business day opportunity to consider a rescue plan, extendable to 40 business days, and with further extensions at the agreement of creditors or the court.
Statutory demands from creditors and winding-up petitions against companies struggling financially due to coronavirus can also currently be suspended.
R3 North East chair Alexandra Withers is now calling on regional company directors to use this additional time to plan for what happens when these measures and other Government support schemes finally end.
And she is urging those who think their businesses might be facing financial issues in the months to come to seek advice about the options available to try to address them.
Alexandra Withers, who is an associate solicitor in the insolvency department of Short Richardson & Forth Solicitors in Newcastle, says: “The measures contained in the Act have added to the options available to insolvency and restructuring professionals whose role in rescuing businesses and supporting long-term corporate survival is now more crucial than ever before.
“The Government’s decision to extend them will be a welcome boost for firms that are struggling as a result of the pandemic.
“It also provides directors of these firms with more time to plan for when both these measures and other Government support initiatives like the furlough scheme end, and we urge them to make the most of this.
“We’ve been through a period of unprecedented state support and directors need to plan for how they will manage when these measures are wound down, especially as it will take time for the business environment to return to how it was before the pandemic started.
“Now is the time for anyone with worries about their current or expected future business finances to seek professional advice.
“Doing so now rather than waiting provides more options to deal with challenges faced by the business, more time to decide which option is most suitable, and more time to implement the most appropriate solution.”