News

Struggling Businesses Facing Tough Choices

28/01/2021

Turnaround and Insolvency options from Graywoods 

The pandemic and consequent lockdown measures have hit the UK economy hard, resulting in the worst recession in history. Few industries have managed to avoid the impact, with many businesses struggling to survive, even with the available government help. Businesses struggling to recover are being left with a difficult dilemma, opt for restructuring or redundancy.

Government support has appeared to create a lifeline for companies but as the support is withdrawn, business owners are now seeing the true extent of the crisis that they are faced with. The ongoing costs and commitments that all businesses face mean that the financial resources held along with any grants and loans quickly become depleted.

Many companies will not appear to be insolvent on the balance sheet or by any other financial test. However, months of uncertainty combined with ongoing costs and declining income mean that they will be aware that they will need to reduce expenditure and overheads.

Many businesses are re-opening but at a significantly reduced capacity due to Government restrictions. The reduction in earnings will mean that they might not even be able to cover their overheads and may then begin to look at redundancy as a potential solution.

The costs associated with redundancy can be significant for companies. Companies that are in a precarious position when deciding to opt for the redundancy route often realise that the cost of making people redundant will make them insolvent. Restructuring, therefore, is now the most viable way forward.

Companies in this position feel as though they are staring into the abyss. It is perfectly understandable in this position, that closure may seem like the only option.

However, this is the time when it really is essential to seek advice and explore every avenue before taking that final step that leads to closure.

It might simply be that the company needs time to get back on its feet and with a careful plan set in place it could be possible to keep a workforce onside for future success.

Where there is light at the end of the tunnel but the concern is that the company will not survive long enough to reach it there are options.

Taking professional advice is key to ensuring that directors have access to high-quality advice when they need it most. Graywoods has the expertise and experience to help companies to cope with financial problems and can advise on all aspects of financial management for companies. From turnaround plans, restructuring and orderly closures where no other options are available, Graywoods can help.

For impartial, in-depth and professional advice on all aspects of turnaround, recovery and insolvency for businesses.

Call Ian Gostellow on 07437028768 or email ian.gostellow@graywoods.co.uk