Struggling East Midlands businesses are being given an early Christmas present with the news that the Government is offering extra breathing space to deal with the impact of the coronavirus.
A raft of legal changes aimed at protecting businesses from insolvency during Covid-19 were due to expire this month, but these have now been extended to next spring.
The announcement has been welcomed by the Midlands branch of the insolvency trade body R3, as it should provide some flexibility for many struggling firms trying to make the most of an unpredictable pre-Christmas trading period. The organisation sounded a note of caution, however, about how and when the measures would be unwound.
Key updates include the continued suspension of statutory demands and winding up petitions until 31 March. Company AGMs will also be permitted to be held online until 31 March, enabling shareholders to examine company papers and vote on issues remotely.
R3 Midlands Chair Eddie Williams, a partner at Grant Thornton in the region, said: “Local businesses now have an extra three months largely free from the threat of creditor action, which means more time to try and get back on an even keel.
“The big question now for the Government is how to withdraw these support measures in 2021 in a way which doesn’t irreparably damage businesses weathering an unprecedented year of trading difficulties.
“One crucial step would be to ensure that HMRC takes an engaged and supportive approach to its role as a key creditor in most insolvencies. With its new preferential status, HMRC’s support as a creditor will be required to ensure that viable restructuring proposals can be agreed. This could save hundreds of jobs and businesses as our region adjusts to a post-COVID environment next year.
“In the meantime, R3 would urge anyone who is concerned about their company’s financial future to seek advice from a qualified professional as early as possible. Doing so will provide more options and time to make a considered decision about what’s best for their business.”