Strict social distancing measures have had a profound impact on businesses who have been forced to close in an effort to stem the spread of the virus as well as numerous others who have had to temporarily stop trading as demand for their services has fallen away. The impact of a sudden drop in revenue has had severe consequences for businesses of all sizes in many sectors, which has left business owners wondering where this leaves them and their company and indeed, how long they can survive.
In response to this crisis, the Government has unveiled an unprecedented set of measures to help and support businesses during this period and to alleviate the financial strains being placed upon them. Some of the help includes access to loans and other forms of finance, support in HMRC Time to Pay periods so that outstanding tax arrears can be deferred and assistance with employees via the Job Retention Scheme.
For some businesses this will provide some welcomed relief and support during this difficult period enabling them to keep afloat but for many this will not be enough. There will be a number of businesses who were already teetering on financial disaster prior to this pandemic and this will perhaps have been the final straw.
For viable businesses, there are a number of tools that can be used to rescue them and allow the company to trade forward. Some of these mechanisms under the Insolvency Act 1986 such as Administration or Company Voluntary Arrangements (CVA’s) allow periods of relief while the business is restructured. Those businesses that experience more severe financial issues may require the winding down of the company to halt any insolvent trading and prevent further debts being incurred.
A Creditors Voluntary Liquidation (CVL) is used to formally wind down a business. The process is overseen by a Licensed Insolvency Practitioner who’s role, once appointed, is to deal with the Company creditors and ensure the Company is closed in the best possible way.
If you find that the effects of the COVID-19 crisis have caused insurmountable strain on your business and you would like a free and confidential discussion about what can be done to help, then please get in touch with one of our experts who can advise on your situation on
0161 694 9955