EXPERT EYE: Help is available for firms in distress

Keith Tully, partner at insolvency specialist Begbies Traynor, takes a closer look at the options available to businesses in Knowsley who are struggling to recover financially from the impact of the COVID-19 pandemic…


The pandemic has created a level of personal and financial stress for company directors not seen on a scale since the credit crunch of more than a decade ago. Our research shows that 9,414 in the Liverpool city region are currently in significant financial distress– a 27% increase over the past 12 months.


Knowsley itself sees almost 500 firms (475) in significant financial distress. Some sectors of the local economy in Knowsley have been more affected than others with three key sectors making up nearly half of the firms in trouble (construction, real estate and support services) at 45% of the total.


We’ve identified at least 39 local manufacturing firms in Knowsley who are also in significant distress. 


A company classed as being in ‘significant distress’ is one with minor CCJs (of less than £5,000) filed against them or which have been identified by Red Flag Alert’s credit risk scoring system which screens companies for a sustained or marked deterioration.


In the vast majority of cases, the directors of these companies will have already done all they can in terms of accessing the variety of Government support initiatives to support their business through the worst economic slump in history. However, we know that they’re now worried about what lies in store for the remainder of 2021.


What next? 


It’s important to remember that proactive steps can be made by business owners to ride out the storm ahead as margins get tighter and creditors get restless.


Bounce back loans came with an impressive list of features, including the 80% security offered by the Government, a fixed rate of interest, and crucially, they did not require repayments to be made for the first year.


However, with the anniversary of the scheme approaching in March, many companies – in particular those who took out a loan when they were first launched – will soon find themselves having to find the money to start repaying this borrowing from what may already be squeezed capital reserves.


Refinancing, unlocking fresh alternative funding sources, time-to-pay negotiation strategies with HMRC and other methods can be used to support the survival of many businesses that are struggling. Where traditional lending isn’t possible funds could be raised against company assets or through a form of invoice financing. 


Where all restructuring and funding options – and disposal options – have been explored by directors it maybe that a formal insolvency procedure is the next step. These options include Administration, Company Voluntary Arrangement, Compulsory Liquidation, Creditors’ Voluntary Liquidation, and (for solvent companies) Members’ Voluntary Liquidation.


If you’re in this situation it is best to act swiftly and get professional advice. Whatever the situation, it can be daunting to discuss all these kinds of business issues. 


That’s the reason we’ve launched a campaign alongside Knowsley Chamber of Commerce to support local company directors as they recover from the financial impact of the pandemic during 2021. 


Take action now 


The  new, free and confidential Directors Advice Line (0800 056 1059) enables company directors to quickly access guidance to resolve issues they face in repaying bounce-back loans, deferred tax bills and impatient creditors.


Business owners in Knowsley can quickly tap into expert knowledge and equip themselves with specific strategies and tactics all related to helping their business survive in 2021. 


Lesley Martin-Wright, Chief Executive  of Knowsley Chamber of Commerce, said: “It’s important that company directors are able to access advice quickly and confidentially if they find themselves in significant financial distress as a result of the pandemic.


“The free Directors Advice Line we are launching with Begbies Traynor enables business owners in Knowsley to tap into expert knowledge and equip company directors with specific strategies and tactics to help their business survive during a challenging business environment for all sectors.” 


If you run a business in Knowsley and you need fast, confidential and expert advice on proactive steps to take to protect your business in 2021 – call the confidential hotline on 0800 056 1059.