We are available to advise you on dealing with the financial impact of Covid-19 on your company. Call us for help in selecting the most appropriate response. Gore and Company has experience of helping clients in times of economic difficulty, having worked through previous recessions in the early 90s and the Financial crisis of 2007–08. We can help clients to identify and implement options for restructuring their businesses to counter the effects of the downturn, or, where no other option is available, to manage an orderly closure of a failing business. Our insolvency practitioners have the formal accountancy and insolvency law experience to ensure that directors are well advised on the decisions they need to take.
The Covid-19 crisis is having an immediate and direct impact on the economy both in the UK and across Europe and the World. It is likely that the outbreak will continue to affect businesses for some time, with estimates of time until we pass the peak of cases ranging from several months to, perhaps, a year. The extent of the damage will depend on how quickly the virus is contained, the steps authorities take to contain it, and how much economic support governments are willing to deploy during the epidemic’s immediate impact and aftermath.
At the sectoral level, tourism, hospitality (hotels, bars, pubs and restaurants) and travel-related industries will be among the hardest hit as authorities encourage “social distancing” and consumers stay indoors. Shares in major hotel companies have plummeted in the last few weeks, and entertainment giants, such as cinema chains, expect a significant blow to revenues. Restaurants, sporting events, and other services will also face significant disruption. Industries less reliant on high social interaction, such as agriculture, will be comparatively less vulnerable but will still face challenges as demand wavers.
The UK government and the Bank of England, along with their international peers, have already intervened to support business, with measures on national insurance, business rates, sick pay and relief for small firms affected by Covid-19. It is likely that these interventions will be added to in the coming days and weeks. As in previous crises, the Government is also likely to help businesses by allowing firms to enter into arrangements to pay business taxes. These measures are designed to preserve the economy and to plant the seeds for recovery.
How Gore and Company Can Help
Gore and Company will track options available to businesses and can advise and assist in negotiations, for example with HMRC on obtaining time to pay. Options to reduce or defer rent with landlords can also be explored with our assistance. We can help you to explore the possibilities for your organisation through a business options review.
Administration may offer an opportunity to save the business. If the underlying business is sound then a terminal procedure such as liquidation would be a step too far. Some companies may be insolvent and will be experiencing cash flow problems, creditor pressure and possibly even a loss of business volumes and profitability. However underlying these issues may be a business that is fundamentally sound because it can be profitable but for the impact of its current liabilities. The Administration procedure enables the company (the order is actually obtained by the directors on behalf of the company), the directors or indeed a creditor and others to obtain an Order from the Court to protect it from its creditors. The Administration Order has the effect of appointing an Administrator, a Licensed Insolvency Practitioner, to manage the company and its affairs and to try and rescue the business.
Another option may be a Company Voluntary Arrangement or CVA, which may allows a company to make a formal proposal to the company’s creditors offering to pay an amount to creditors in satisfaction of their debts over some period of time. A CVA may also include other proposals such as a rent reduction or raising new investment.
It is sometimes clear that a company must be closed down because it is insolvent and unable to continue to trade. Discussions with an Insolvency Practitioner can mean that the worry is lifted from the shoulders of the directors and a professional is put in charge of closing the company down through a liquidation process. The directors then need to know what their obligations are, if there is any costs to them and what, if any, claims could arise against them. Gore and Company makes the process simple and straightforward and aims to answer these important questions.
The Government's response to Covid-19 continues to evolve and we are tracking the options available to directors so that we can offer current and relevant advice. Contact us for help in assessing the best route for your business.