3rd July 2020
Leonard Curtis Bristol Director Andy Beckingham on some of the challenges created by the coronavirus outbreak and the steps being taken to overcome them
As its implications on our health and healthcare services start to ease, the full impact of COVID-19 on businesses and the economy is yet to become apparent. And, until we are fully aware of how the pandemic will pan out and what support will ultimately be available to companies, we’re working closely with our SME clients and accountant partners across the region to help them prepare to respond.
Now passed into law, the Corporate Insolvency & Governance Act (CIGA) seems to be highly promising legislation that will help overcome likely widespread SME financial distress in coming weeks and months. It has been accelerated through parliament in response to the impact of Covid-19 on businesses, and its main provisions took effect from Friday 26th June (although some temporary measures will have retrospective effect from 1st March).
Many of the changes introduced by the legislation are being very warmly received by our professional partners, the SME clients they advise and by the Leonard Curtis team, as they provide more time, breathing space and options for us to develop lasting and effective solutions.
Some particular permanent reform features within the Act that are expected to be helpful include extended provisions to protect a company from suppliers wishing to terminate supply contracts whilst it’s experiencing difficulties. As well as providing suitable protections for suppliers, it will also give clients and those advising them additional breathing space to consider all options.
Furthermore, new moratorium provisions under the supervision of a qualified “Monitor”, should allow opportunities for genuine company rescue plans to be formulated and enacted in consultation with creditors and other stakeholders, rather than inappropriate business or asset sales simply being forced though – without any attempt being made to consult or address underlying problems.
As a multi-disciplinary professional services Group – providing many areas of specialist expertise – the solutions that we’ll be able to provide under this new legislation will be even wider and greater.
What’s more, the Act may encourage earlier collaboration from all involved parties, which can only be of benefit to clients looking for the best solutions as quickly as possible. We know that early engagement always maximises the options available.