As we still hear varying views as to whether the pandemic is over or not, it can be confusing for businesses trying to plan for the future.
However, if we are to take our steer from government, they are unravelling the numerous support measures that were introduced to help businesses survive the pandemic and appear to be heading back to business as usual, in so far as that is possible with the atrocities in Ukraine continuing.
What has already gone?
Disapplication of wrongful trading rules of section 214 of the Insolvency Act 1986 was removed in September 2020, and whilst this has been the subject of criticism that in the pandemic it puts directors in a very difficult position and some may have been tempted to just shut up shop, it does not look likely to return.
I am sure that we are all very aware that the furlough scheme ended in September 2021, with the undoubted consequences for a number of sectors, most notably hospitality, as the various waves of differing variants of Covid wash over us.
But do any of the other provisions still continue and for how much longer?
The short answer is yes, but not for much longer.
What do we lose on 31 March 2022?
Restrictions on winding up petitions – these were introduced in the Corporate Insolvency and Governance Act 2020 and required creditors to seek proposals from the debtor business for which they had to give 21 days ahead of issuing any petition and in addition the debt had to exceed £10,000 rather than the £750 previously needed.
Protection against the eviction of commercial tenants – this lapses on 31 March 2022.
Depending on whether you are a debtor or a creditor, will determine your view on this, but it will undoubtedly expose a number of smaller businesses to potential attack by their creditors.
What has been extended beyond that date?
Business Recovery Loan Scheme – this has been extended to 30 June 2022, subject to a number of additional restrictions in the criteria, which have been effective since January 2022.
The scheme is now only open to small and medium sized enterprises, who can show that they would have a viable business were it not for Covid. The maximum facility has now been reduced to £2m and the government guarantee has been reduced from 80% to 70%, however it retains the conditionality that the director/shareholder principal private residence cannot be considered as security. The term of the loans vary depending on their nature between 3-6 years.
If any of our contacts are involved with, or knows of anybody whose business is struggling, we would urge them to act decisively and seek independent professional advice and that is why we are always available for an initial zero cost assessment which can be arranged by contacting Alistair Dickson at SKSi.