The Government yesterday announced further support for businesses impacted by the outbreak of the Omicrom variant, making grants for eligible businesses of up to £6,000 per premises plus additional funding available to local authorities to support other businesses which may be affected.
Whist this may provide some relief to businesses, it is estimated that those in the hospitality trade have lost 40-60% of their normal December trade which would normally account for a significant percentage of their annual turnover.
Although the majority of the support provided to businesses at the start of the pandemic was removed on 1 October 2021 there remains some protection in place for businesses which includes:
Legislation regarding Landlords & Tenants
Earlier in the year, legislation was enacted to ring-fence outstanding unpaid rent that has built up when a business has had to remain closed during the pandemic. Landlords are expected to make allowances for these ring-fenced rent arrears and share the financial impact with their tenants.
The legislation is intended to help tenants and landlords work together to come to an agreement on how to handle the money owed. This could be done by waiving some of the total amount or agreeing a longer-term repayment plan. However, this does require both parties to be proactive and enter into negotiation with each other.
This agreement should be between the tenant and landlord and, if in some cases an agreement cannot be made, the law will ensure a binding arbitration process will be put in place so that both parties can come to a formal agreement. This will be a legally binding agreement to which both parties must adhere.
In order to ensure landlords are protected, the government is making it clear that businesses who are able to pay rent, must do so. Tenants should start paying their rent as soon as restrictions change and they are given the green light to open.
The existing measures to protect commercial tenants from eviction are currently in place until 25 March 2022. This is intended to ensure that the sectors which are unable to open have enough time to come to an agreement with their landlord without the threat of eviction.
Protection for smaller and medium sized firms.
- The threshold on the amount due for a winding up petition to be issued has been increased from £750 to £10,000.
- A requirement for creditors to seek proposals for payment from a debtor business, giving them 21 days for a response before they can proceed with winding up action.
Both these provisions are in place until 31 March 2021 and will provide additional relief from the immediate threat of recovery actions from creditors.
New Powers for the Insolvency Service from October 2021
It has been estimated that approximately £30 billion of CBIL’s and BBL’s were obtained fraudulently. In an attempt to help recover some of these amounts, the Insolvency Service has been granted new powers to tackle unfit directors who dissolve companies in order to avoid paying their liabilities.
The new legislation extends the Insolvency Service’s powers, on behalf of the Business Secretary, to investigate and disqualify company directors who abuse the company dissolution process.
The Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 will also help tackle directors who dissolve companies in order to avoid repaying the Government backed loans that were put in place to support businesses during the Coronavirus pandemic.
RPG Business Recovery
Directors should take stock of the current financial position of their company, undertaking an honest review of cash flow and future projections. The past twelve months will undoubtedly have taken a heavy toll on the finances of many companies and, now more than ever, it is important for directors to be pro-active and have their own road map for the next twelve months; it’s essential that they understand their market place and potential challenges that may lie ahead.
I would urge those business directors who, having undertaken this review, can see that they may have problems ahead, take immediate advice. Taking immediate action can save a business’ future.
As Insolvency Practitioners, our focus is not just on formal insolvency proceedings. If we are appointed at an early stage, we can provide an independent view of the company and the options that are available. The earlier the steps are taken to resolve any potential problems, the more options are available.
Business Recovery can take many different shapes and sizes, and in many cases formal insolvency proceedings can be avoided, provided early action is taken.
Whilst in some circumstances formal insolvency cannot be avoided, in many instances we can keep the doors open and assist in restructuring the business.
Members of RPG Business Recovery team, based in Manchester can provide a full range of both formal insolvency procedures and business restructuring and refinancing. Our Insolvency Practitioners have a wealth of experience and provide honest sound advice when it is most needed. Our advice is always provided by a qualified Insolvency Practitioner. We would be very happy to have an initial discussion with you regarding your own business or your clients’ businesses. Please email info@rpg.co.uk or call 0161 608 0000
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