How time flies! We first circulated an article introducing our Recovery Planning Tools to our professional contacts and friends in November 2020 after the announcement of successful vaccine trials, the US election and an extension to furlough. Now, a little over four months later, there have been 30 million first dose vaccinations in the UK, furlough has been extended until September 2021, and on 22 February the Prime Minister set out his “irreversible” roadmap out of lockdown. The recent developments seem to be moving us from hope towards genuine progress for a cautious, stepped, unlocking of UK Plc.
The recent positive news gives businesses, especially those in the SME sector, something to plan for. At Mercer & Hole we believe that planning today is essential for success tomorrow. To help, we have created simple and adaptable recovery planning tools, including a guide to creating a One Page business plan and a financial checklist, both of which can be accessed from our website.
While we know that many of you have already used our support tools, we continue to encourage you, as friends of the firm, to use the tools, provide them to your clients, and work through how businesses can navigate the coming months. This will help maximise the opportunities that will come during the course of 2021.
In addition, we are on hand to discuss how businesses’ own roadmaps out of lockdown can be navigated using our planning tools to facilitate the key decisions that await any business in the coming weeks and months. As we move through 2021, there promises to be a path to some form of normality. However, the challenges of the past year will still need to be resolved in order to benefit from the opportunities that lie ahead.
Many businesses will be burdened with debts which have accumulated during the pandemic, and they will be structured for a 2019 marketplace when the new world may be quite different.
We believe that businesses will often be able to work with stakeholders, such as HMRC and landlords, through early engagement, to structure a mutually acceptable solution to the legacy of 2020. Where a solvent solution cannot be achieved, the Insolvency Act and, in particular, the Corporate Insolvency & Governance Act 2020 provide restructuring specialists with debtor in possession processes, such as the Moratorium, the CVA and light touch administration, to protect businesses and assist with their recovery.
There have been several extensions to many of the emergency measures introduced to protect debtor companies during the pandemic, such as furlough, commercial eviction and winding-up bans, rates holidays and relief from liability for wrongful trading. We might hope for no more extensions as it should signify a return to normality, but the government may need to smooth the cliff-edge of ending the ban on winding up companies if by late June there remain many who have not yet generated the cash needed to pay their debts.
The recent extension announcements provide a reasonable framework within which SMEs can plan for future trading. It would be a tragedy for businesses to fail after surviving for so long during the pandemic and with ‘normal’ trading seemingly within touching distance.
It is therefore essential to use the time available today to plan – to deal with the problems of yesterday in order to thrive tomorrow.