Updated: 1st December 2020
Following the second national lockdown which came to an end on December 2nd 2020, the country was placed into a tiered system based on local risk levels. The most severe, tier 3, means many hotels and indoor leisure venues will have to close their doors, while hospitality businesses such as restaurants and pubs can only provide a takeaway service.
While some will be able to generate some much-needed revenue by operating in this way, it will be at a level which cannot compare to a busy weekend this time last year. Many others will make the decision that operating in this way is simply not worth opening at all.
Unfortunately for many of those who have found themselves in tier 3, this is not a new challenge being faced. Those in the worst affected areas of the country have been operating under severe restrictions for many months, with some never really having had the chance to reopen fully since the first lockdown was announced. This has decimated cash flow with money needing to be used to cover overheads without any income coming into the business.
If your business has found itself under tier 3 restrictions, you may be concerned about what the future holds and whether you can continue operating. Here are some things which may help:
While these schemes could provide the lifeline some businesses need to get through these challenging times, for others, they will not go far enough. Depending on the scale of your problems, and whether you believe your business is viable in the long-term, you may need to consider a formal rescue or restructuring strategy.
When it comes to business rescue, there are a variety of options which can be considered. By taking advice from a licensed insolvency practitioner, you will be able to understand what each of these options entails and which one is likely to be the most appropriate solution for your company.
If you believe your company has a future yet it is struggling to pay creditors with a reduced income, a Company Voluntary Arrangement (CVA) may be able to help. A CVA involves formal negotiations between a company and its creditors in order to reduce monthly outgoings while still allowing the business to continue to trade.
Alternatively, those companies facing mounting pressure from disgruntled creditors could opt for administration in order to give the company the time and breathing space it needs to work out a way forward.
If the problems caused by the continuing coronavirus crisis has taken your business beyond the point of rescue, you may be left with little other option than to wind it down and place it into liquidation. This can be achieved by way of a Creditors’ Voluntary Liquidation (CVL) in which an insolvency practitioner is appointed to manage the orderly shutdown of an insolvent company. They will be responsible for identifying company assets, dealing with all outstanding creditors, before ensuring the company is removed from the records held at Companies House. At that point the company will cease to exist as a legal entity and all outstanding liabilities will be written off, unless they have been personally guaranteed.
When your company is experiencing financial distress, the best thing you can do is to take swift advice at the earliest possible opportunity. The sooner you seek help, the more options will be available to you and your business. Speak to the experts at Real Business Rescue today on 0800 644 6080 and take the first steps today.
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