2nd February 2022
Alex Cadwallader, Carl Faulds and Andy John from Leonard Curtis, contribute to the first print issue of South East Business Insider – due out next week!
Leonard Curtis, one of the UK’s largest turnaround and restructuring businesses, talk rescue and recovery strategies as firms face a hugely challenging new year.
It’s six months since the start of the Government’s withdrawal of support strategies for SMEs around rent arrears, loans and job protection schemes,
and these have undoubtedly been hard yards for business owners and advisers across the South East.
Plotting recovery remains a huge challenge for most firms – and we include ourselves in that as business owners too – and forecasts for 2022 paints difficult picture.
Recent research papers from global insurance giant Atradius and others suggest that in 2022 we will see a dramatic 30% increase on pre-pandemic levels of insolvency, affecting over 21,500 businesses.
The forecasts are echoed in the Government’s latest ONS data (Dec 2021 Wave 5 Business Insights & Conditions Survey) which reports that of all businesses not permanently stopped trading, 7% reported low or no confidence in surviving in the next three months. This rises to14% among business owners operating in transport and storage sectors. Around 25% of all businesses reported they had less than 12 weeks of cash reserves to fall back on.
If you add to this the Q32021 figures around County Court Judgments (CCJs) – up 139%- it’s no surprise that market analysts are now estimating there are over 500,000 businesses in financial distress, a 17% increase since the last quarter.
Insolvency avoidance
At Leonard Curtis we specialise in delivering practical and effective insolvency avoidance measures wherever possible, working in close collaboration with accountants, funders and other professional advisers.
We are already helping SME owners across the South East create manageable debt repayment strategies to run alongside normal business operations and literally work their way back into the black.
Recovery from BBLs
Carl Faulds, from Portland Leonard Curtis in Southampton, said facing debt realities provided an essential platform for recovery. He commented: “The bounce back loan (BBL) scheme provided quick access to funds to help companies survive the effects of lockdown on their businesses. As we know due to the unprecedented demand for BBLs, limited checks were carried out by the banks and directors simply had to self-declare that the company was eligible. We are helping business owners identify pressures building from repayment challenges to get them to a managed solution as quickly as we can.”
Under the right specialist guidance, South-East based SMEs are proving they are agile enough to do this – many already have- adapting and dealing with new scenarios and capitalising on new opportunities that present themselves.
Working with HMRC
Andy John, from Leonard Curtis in Kings Langley, works closely with specialist colleagues on Time To Pay arrangements with HMRC.
He commented: “In July HMRC restarted its debt collection work and is contacting all businesses with tax liabilities to recover the outstanding debts. Business owners who are committed to bringing their debt into a managed arrangement will benefit from a flexible approach, but we are now seeing a return to normal levels of enforcement for those who don’t. So we are saying to businesses start communicating with HMRC, especially those with sizeable arrears which predate Covid, and if you need to, consider using specialist help.”
Funding for growth
The fastest-growing part of the Leonard Curtis business is in positive, non-insolvency solutions. Carl Faulds again: “Our commercial finance team works with over 60 lending partners to support businesses facing financial difficulties and drive recovery growth.”
Alex Cadwallader again. “The main advice we give all business owners in difficulty is don’t bury your head and hope problems will go away. Even if a formal insolvency process becomes necessary, it doesn’t always mean the end of the road. but you need to act quickly. By knowing what to look out for – and what steps to then take – a business has more time to react. Rescue is almost always the priority. Where we are referred early enough, we can usually develop the right course of action.”