In Focus Commercial Credit
tool; 34.9% said they expected it to be an administration. Our members expect demand for support
In the mid-to-long-term, the balance will shift to supporting businesses through an insolvency process – some will still have a prospect of rescue through administration, while others will simply be too far gone and will be wound-up through a CVL
of respondents said they expected to recommend financial restructuring; 19.1% said they expected it to be a Creditors’ Voluntary Liquidation (CVL). Over three months, a total of 29.1% of
respondents said they expected the most commonly recommended tool to be a CVL; 28% said they expected it to be an administration. Over a year, 37% said they expected a CVL to be the most common recommended
to shift from restructuring work towards more traditional insolvency processes over the next 12 months. This is illustrated by the fact that the
majority expect to recommend financial restructuring, which is not a formal insolvency procedure, over the next month, while over three months and a year administrations and CVLs, which are formal procedures, are the tools members say they are most likely to recommend. What this suggests is that the short-term
nature of the enquiries is going to be about providing turnaround support for firms that can be rescued without resorting to formal restructuring or insolvency procedures. In the mid-to-long-term, the balance will
shift to supporting businesses through an insolvency process – some will still have a prospect of rescue through administration, while others will simply be too far gone and will be wound-up through a CVL. The question is how this balance between rescue and winding-up will play out over the coming months.
Job Retention Scheme When asked which of the government measures they would describe as ‘very effective’, seven in 10 (70.5%) named the Job Retention Scheme, nearly half (45.9%) said tax payment deferrals, and more than a third (35%) named the business rates holidays. Employee costs are typically the largest
expense for a business. The government’s Job Retention Scheme
has lifted much of this obligation from the companies which took part in it, while tax payment deferrals also help manage a big expense and a common trigger for corporate insolvencies. As a result, any income that businesses
receive during the pandemic can go towards supporting their future activities and mean also that supply chains can continue to function in some way during the pandemic. One business’s insolvency can have a
‘domino effect’ on its supply chain, and the government measures have helped to reduce the risk of contagion spreading from one company to others to which it is linked. CCR
August 2020
www.CCRMagazine.com
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