AN insolvency expert from Edinburghis urging Scotland’s directors to be alert to the signs of business distress as the Government’s furlough scheme enters its final month.
Tim Cooper, who is chair of insolvency and restructuring trade body R3 in Scotland and a partner at Addleshaw Goddard, called on company directors to be vigilant to signs their business might be in trouble, and seek advice if they showed themselves.
“Directors of firms that have been affected by the pandemic can claim support for staff wages under the Coronavirus Job Retention Scheme for another 30 days, but they need to be aware of signs their business may be struggling or may struggle when the support stops”, he said.
“Signs of business distress can include problems paying wages, issues paying suppliers on time, or problems with cashflow. If a firm is experiencing any of these signs, their directors need to seek advice from a qualified source about how to resolve the situation.
He continued: “Solutions for these kinds of problems can often be as simple as refinancing or consolidating the company’s debt, but it’s critical is these options are explored before the issue spirals into something much more serious, which is why directors are better off seeking advice as early as possible.”
“It’s very hard to admit your business is struggling, but starting the conversation as early as possible will mean you have more potential solutions open to you, and more time to make a decision about how you move forward.”
R3 in Scotland has developed a free guide for company directors, which explains the common signs of business distress and the full range of restructuring and insolvency options that are available to businesses that are experiencing it.
Tim Cooper continued: “We developed this guide to give company directors all the information they need to identify the signs of business distress, and so they can understand the options that are open to address it.
“The pandemic has disrupted trading for nearly a year and a half, and forced more than 98,000 businesses in Scotland to borrow in excess of £4bn* from the government and furlough more than 400,000 employees at the peak of the pandemic**, so these are far from normal times.
“We know there are a large number of directors who are worried about the future and unsure what to do if their business is struggling, and we hope they’ll use this guide to get a clearer understanding of whether their business is struggling, what they can do to turn it around, and where they can get the help they need to do it.”
