During lockdown business owners have focussed on surviving the unknown. As we take bigger steps towards the old normal it is important that business owners take an objective look at the financial health of their business and its own progress to the new normality.
The wrongful trading provisions may have been temporarily suspended; however, this does not mean that directors can continue to trade without regard to their directors’ duties
If your company is insolvent (either on the basis that it cannot pay its debts as they fall due or on a balance sheet basis) you need to ensure that you are acting in best interest of creditors. Plenty has been done in legislation to provide some cover where the issues are pandemic related but prudent directors need navigate their way through and demonstrate they have acted reasonably.
It is essential that you consider your cash flow and future business contracts as well as the payment of future liabilities such as deferred tax and loan repayments. Make sure this is clearly documented.
Also, consider the financial position of your key suppliers, customers and your competitors.
As a result of the Corporate and Governance Act 2020 there is now the ability to use a standalone moratorium which leaves the company’s directors in charge but allows a breathing space whilst a rescue strategy plan is agreed.
If you are unsure as to whether your business can continue through the next few months, please seek professional advice now. This can provide both assurance and a different angle.
Do not wait until 2021 to obtain advice, because by that point your options maybe restricted and your personal financial position may be affected.
Need some advice on restructuring your business, we’re here to help – get in touch.