BUSINESS OBJECTIVES ACHIEVED
The Corporate team work with companies (including directors and shareholders), Accountants and other third parties when focusing on a company's turnaround, restructure or refinance. We provide tailored commercial advice guiding the business and its directors through appropriate restructure or formal insolvency procedures.
We are specialists in assisting buyers, sellers, directors, shareholders and insolvency practitioners in transactions of an insolvent nature. Including the transfer of assets, TUPE considerations, the transfer of novation of contracts and the assumption of liabilities and the negotiation of warranties.
We also have a significant amount of experience in members voluntary liquidations (including Section 110 reconstructions), de-mergers, capital reductions and prepack administrations.
Our Insolvent Restructuring services include:
There are a number of early signs to look out for in respect of a company's declining financial position, including:
Early action is key! Directors have a duty to promote the success of the company and must have regard to the likely consequences of any decision in the long term. They must also exercise reasonable care, skill and diligence when carrying out any functions as a director.
As soon as directors become aware of financial difficulties, they should seek professional advice from a corporate insolvency solicitor, insolvency practitioner or accountant to discuss all the available options. Professionals prefer to be approached at the earliest stage as more solutions may be available to recover the business and avoid insolvency all together.
If an under performing company continues to trade at a loss and no remedial action is taken, it could very quickly progress into what is known as a distressed company. At this point, there are fewer recovery options available and it may be too late to save the business.
If a director knowingly continues to trade and fails to act, they could be found guilty of wrongful trading, fraudulent trading or misfeasance or breach of any fiduciary duty or other duty. The consequences would see the individual directors become personally liable for any outstanding monies and debts of the company.
The government introduced the Corporate Insolvency and Governance Act in June 2020 which amended insolvency and company law to support businesses during the COVID-19 pandemic. It introduced new corporate restructuring tools and temporary measures to alleviate the impact of Covid-19 and to allow businesses some breathing space to seek advice and support.
One of the temporary provisions includes restrictions on statutory demands and winding-up petitions, meaning that creditors cannot present a winding- petition unless they can prove that the financial issues of the business are not as a direct result of Covid-19. These restrictions have been extended until 31st December 2020.
The Act has also relaxed the rules on company meetings and filing requirements, providing companies with greater flexibility and time to hold meetings. Companies who are obliged to hold AGMS will continue to be able to hold these virtually until 30th December 2020, allowing shareholders to review company documents and vote remotely.
Termination clauses remain prohibited by the Act, preventing supplies from ceasing to supply or asking for additional payments while a company is undergoing a rescue process. Companies should note that small supplies are exempt and do not have to supply until 30th March 2021.
The new moratorium procedure has been extended until 30th March 2021, giving companies breathing space to explore rescue plans and restructuring options without creditor action.
Finally, businesses are protected from the threat of eviction until the end of 2020 following an extension to the commercial eviction band.