Insolvency Practitioners providing expert turnaround & insolvency advice
turpin barker armstrong are a firm of licensed insolvency practitioners based in Sutton and West Byfleet, offering clear professional insolvency advice to both companies and individuals throughout London, the South East and the whole of the UK.
Over 35 years experience
With over 35 years of experience we pride ourselves on providing clear expert debt advice to companies and individuals who struggling financially. Our friendly professional team of insolvency practitioners and qualified accountants have expertise in all areas of business insolvency and personal insolvency, there is rarely a scenario we haven't come across!
Early advice is always best
As insolvency practitioners we always look to the positives and try to save businesses through turnaround and restructuring. To give your business the best chance of survival we strongly recommend seeking insolvency advice as soon as the first signs financial stress arise. Early action could increase the options available to you or your company.
Whatever situation you or your company may be in, we are confident that one of our insolvency practitioners would have dealt with it before. To get some free advice and discuss how we might be able to help you or your business don't delay and get in touch today.
We are happy to answer any questions no matter how small and find that seeking early advice can often be beneficial.
All our insolvency practitioners are regulated and licensed to provide corporate insolvency and personal insolvency services by the Institute of Chartered Accountants in England and Wales (ICAEW).
Contact us here or call us on 020 8661 7878
Trading whilst insolvent - should I worry and what should I be doing in a Covid-19 world?
As an owner of a struggling business there is always concern (I hope, but depending upon your morals!) at the increasing debts owing to creditors. As an owner it really is vital that consideration is given to the situation as a whole. Sometimes the guilt of how your situation is or may affect other people (trade creditors, employees etc.) can lead to thinking “if I can just get through this bad patch…” What if you can’t though, what if the company was and has been insolvent for some time? You’ve done your best right?
Well not quite and nothing is simple. As a director, when a company becomes insolvent the director’s duties should focus on the creditors taking into consideration the risks of wrongful trading. It is an additional burden to add to the already considerable burden of simply running a business which is not easy at the best of times.
But what does this mean in a Covid-19 world because the Government said wrongful trading no longer applied? It will apply now. For most business owners, they had never come across wrongful trading or had much need to consider insolvency options. Through no fault of their own they have been confronted with challenges they did not deserve to have but that is where we are. The point to be aware of now is that wrongful trading did not apply until 30 September 2020 but it will do so after this date.
In a way it is a subtle change that may go under the headlines. It is dangerous to read too much into it but perhaps there is a message to take from it that the Government is here to support businesses where they can and have until now protected business owners completely to give them comfort to continue. However, it could be seen as a signal that the Government expect business owners to take back some of this responsibility.
Fraudulent trading under section 213 of the Insolvency Act 1986 would require an element of dishonesty on the part of the director or others. As a result, fraudulent trading should only really be a concern if a director has genuinely been dishonest. If you are reading this article and looking for advice then I suspect this is unlikely to apply to you.
Wrongful trading under section 214 of the Insolvency Act 1986 on the other hand casts a far wider net. The criteria here is simply “that person knew or ought to have concluded that there was no reasonable prospect that the company would avoid going into insolvent liquidation”. Once it became clear to the director that there was no longer a reasonable prospect that the company would avoid going into insolvent liquidation, that person must have taken every step with a view to minimising the potential loss to the company’s creditors as he ought to have taken. The bench mark is that of a “reasonably diligent person”.
On the application of a liquidator the court may declare that that person is to be liable to make such contribution to the company’s assets as the court thinks proper.
Wrongful trading claims have historically been pretty rare and this re-introduction of the application of wrongful trading should not generate fear and mean that a business needs to cease trading immediately and close the doors. It is something to be aware of and consider going forward.
Taking advice and keeping a record of your decision making is key. Never before has the regular review of financial information been so important. This enables business owners to clearly understand their existing position and take steps to make changes where necessary.
The added benefit is that if business owners then need to consider restructuring options such as a Moratorium then it enables a quick turnaround of advice and for plans to be put in place immediately.
There are many excellent practitioners out there to support businesses in the accountancy, legal and insolvency sectors and if you need further advice please get in touch.
Call us on 020 8661 7878 for a free no obligation chat or fill out our contact form here.
So what have I learned from the last few months:
- Customer service is key: Larger firms have often failed to perform through lack of stock, poor customer service, cancelled orders with no notice. Smaller businesses have often excelled.
- I felt anxious at the start of the lockdown because of media coverage and perceived shortages of certain products. The local businesses helped me with this and supported the local communities. I would like to maintain the relationships that have been formed with these businesses.
- For certain products like branded goods we will tend to buy from larger firms because of the price. However, where possible I try and purchase anything else from local businesses.
- I am more inclined to shop local where the ease of shopping is there and even more so if there is an ecommerce platform of some form. For example, I have purchased food and drink from local wholesalers and shops where they acknowledge receipt of orders and turn around orders quickly and most importantly show they want to build a relationship with you.
- We use local businesses for many services and have started visiting more local shops to see what they provide and getting food from pubs and takeaways who are now set up better for this.
- Often we are guided by word of mouth recommendations of local businesses.
- When I visit a website for a local business if it is not easy to navigate and I cannot find a way of placing an order or I speak to a disinterested member of staff on the phone then I tend to lose interest quickly.
- I want to support the local community and local businesses more now than ever before.
- I am willing to pay more for the goods and services because of all the positive aspects of shopping more locally.
For many smaller businesses there is no quick fix but if my behaviour is reflected by others then with the combination of focussing on the following it will certainly help:
- Focus on customer service and making any customers feel important. These customers are then your fans and will go out there telling others and doing your marketing for you;
- Get testimonials and recommendations and then tell everyone about them;
- If you have a website getting people to test it, pick holes in it and make the customer experience better;
- If you have an “ecommerce” function whatever that may be – make it easy to use.
A tenth of businesses that are debt-laden due to COVID-19 could fail
The study showed that around 42% of businesses have used schemes, such as the Bounce Back Loan and Coronavirus Businesses Interruption Loan, during the current crisis.
As a result of taking on this additional debt, a quarter of businesses have reported that they may have to scale back operations to repay what they owe in future, while a further 11% said they might have to cease trading.
The survey of 502 firms, predominantly operating in the manufacturing and services sectors, also revealed that most companies relying on schemes had done so to support critical day-to-day business operations.
It showed that around 71% had cash flow issues, 43% used the money to cover critical overheads and 40% said that without the support they couldn’t afford to pay staff.
Responding to the findings, Dr Adam Marshall, Director of the BCC, said “With many businesses still facing reduced demand, depleted cash reserves, and continued uncertainty, bold solutions will be needed to prevent thousands of firms across the UK from falling into a spiral of unsustainable debt. If not addressed, large debt burdens could stifle the recovery, threatening jobs and constraining business activity and investment."
As well as looking at the impact of the pandemic, the BCC research also asked businesses how they think loans and support should be repaid to reduce the financial stress on businesses. Of those companies asked, nearly a fifth said they would like a student-loan-style repayment system, whereby loans are contingent on a means-tested basis. This was followed by 16% of businesses who said they would prefer a longer fixed-term period to repay the loan.
"Over the coming months, the Government, regulators and banks must work together with business communities to find solutions that help firms repay coronavirus loans sustainably and access the support and services they need at this challenging time," Dr Marshall added.
If you are concerned about debt issues as a result of the financial support you have received during the pandemic, please contact us. The sooner you get in touch the more options may be available to you.
Re-energise your business
Our expert team will undertake a full and fundamental review of your business and its needs, focusing on structure, products, employee contributions and management functions.
Our business recovery options include:
• Debt management
• Lender and creditor negotiations
• Cash flow forecasts
• Cash flow management
• In-depth business review
• Diagnostic modelling
• Business restructuring
• Turnaround implementation
• Accelerated mergers and acquisitions
• Contingency and insolvency planning
• Optimised exit services
We also undertake forecasting assessments to evaluate the accuracy of quotes and costs and the impact of any discrepancies we identify on profitability.
Don’t delay – ask us what your business needs to re-energise itself today!
Call us on 020 8661 7878, or fill out our contact form here or email us at email@example.com