ARE YOUR CREDITORS BAYING FOR CASH? THERE IS STILL HOPE
It’s happening to huge numbers of businesses. Directors everywhere are burning the midnight oil trying to find a way out of the crisis. My business partner and I have paired fixed costs down to the bare minimum. Eventually, we simply ran out of options. With a Government “Bounce Back” loan we are now OK but, for many, the clock continues to tick. Cashflow remains critical.
It isn’t easy, but there are answers and there is some good news from the British Government.
New legislation will delay the moment when creditors can start insolvency action against the Directors of a Company. Better still, it will provide those same Directors with a level of protection against accusations of operating in the knowledge that their Company is insolvent.
LEGISLATION THAT REALLY HELPS
The Corporate Insolvency and Governance Bill is a wide ranging bit of law, some of which creates temporary changes whilst others will be permanent. I strongly recommend that you have a look at it and understand its provisions because it could help you hugely. It has just reached the House of Lords and had its second reading so there is a good chance it will become legal reality at the end of June. Better still, judges are able to take some account of the intent behind the bill even now whilst it remains in draft and may decide to delay proceedings until it comes into force.
One key measure allows a business to claim an initial period of 20 days when creditors cannot start action against the business. Applying for this is relatively straightforward, although you will need to appoint a “monitor” to oversee your activity thereafter. Once done it means the directors can continue to run the business and are protected from legal action that might, in previous days, have been taken against them for knowingly trading when insolvent.
IMPACT ON YOUR SUPPLIERS
A further measure means that creditors are obliged to continue to supply a business during this period. This will give you a much better chance of going on trading and it will buy time for you in which to reorganise.
Have a good look at the legislation. Take some advice if you can. Be ready to take advantage of the many changes it introduces.