COVID-19 business support – what has changed?
- As many of you will know, yesterday saw the end of the Coronavirus Job Retention Scheme and as of today, Friday 1st October, there is no further financial support available in relation to employees.
This may cause employers to rethink their financial position and whether staff can be brought back or not, depending on how trading levels have bounced back. If you have a client in this situation, where they cannot afford to keep staff on nor pay them their redundancy, a formal insolvency procedure will help to ensure employees can access statutory redundancy pay.
- Temporary insolvency measures introduced to support businesses throughout the pandemic have also now ceased, with the government implementing ‘targeted measures’ effective from today, until at least 31st March 2022.
The new targeted measures will temporarily increase the debt threshold for a winding-up petition from £750 to £10,000 and will require creditors to request payment proposals from a debtor business, allowing 21 days for a response before winding-up action can be taken. Where the unpaid debt is due to Covid-19, no winding up order will be made. (New business support measures: Corporate Insolvency and Governance Act 2020 – House of Commons Library (parliament.uk)
Whilst this is welcome news for businesses that are still struggling, creditors owed less than the increased threshold will be unable to take action to wind the company up.
If you have a client that has debts to individual creditors over the new £10,000 threshold, and they may face financial pressure over the coming weeks, contact us to discuss their options and to implement a rescue strategy.
- Finally, Bounce Back Loans (BBL’s) – we have had many queries over recent weeks about the treatment of companies that have taken BBL’s and there had been some guidance issued, though this has now been retracted.
Essentially, The Insolvency Service has advised Insolvency Practitioners to take an ethical stance on BBL’s and the use of any remaining monies, allowing some of the funds to be used for the insolvency process, within reason.
The Insolvency Service has also indicated that it expects detailed reporting on how BBL money had been used, prior to the company going insolvent.
If any of your clients are facing challenges relating to the above topics, we strongly advise seeking professional advice as soon as possible, to maximise the rescue options open to them. Contact us for an initial, no obligation consultation in confidence:
North office: 01625 544 795 | South office: 01442 233 123 | East Mids office: 01246 224 399