Protection from Wrongful Trading claims to end on 30 June 2021

The Corporate Insolvency and Governance Act 2020 suspended liability for Wrongful Trading as part of a series of temporary measures introduced during the pandemic.

Whilst the suspension of presentation of statutory demands and winding up petitions has been extended again until the end of September, no further extension has been provided for in relation to Wrongful Trading.

Personal liability will therefore attach to directors who continue to trade after 30 June 2021 if a subsequently appointed liquidator can establish that they knew or ought to have known that there was no prospect of the company avoiding insolvent liquidation after that point.

For more information please contact Jon Law

New requirements for pre packaged Administration sales to come into force from 30 April 2021

Under the snappily entitled ‘Administration (Restrictions on Disposal etc to Connected Persons) Regulations 2021’ an Administrator must not make a substantial disposal of a company’s assets or business to a connected party within 8 weeks of their appointment unless either:

  1. The company’s creditors have approved of the disposal; or
  2. A ‘qualifying report’ in respect of the making of the disposal has been obtained.

As creditor approval will, as a consequence of the Administration procedure itself, usually only be obtained some time after the Administration appointment, the second option will become the default where a pre packaged sale is being considered.

The Regulations only apply to a disposal to a ‘connected person’ such as a director or shadow director of the company in Administration or an ‘associate’ of such person or the company itself.

 Much of the debate on the Regulations has focussed on the requisite qualifications for the ‘evaluator’ preparing the ‘qualifying report’. The Regulations state that an evaluator is an individual who-:

‘..is satisfied that their relevant knowledge and experience is sufficient for the purposes of making a qualifying report”

The bar would therefore appear to be set fairly low with the evaluator’s opinion of their own competence and experience being the main qualification. It is, however, also a requirement that they have suitable professional indemnity insurance in place which might provide some commercial constraints on inappropriate individuals trying to enter the market.

For more details, please contact Jon Law at SWBR

Four in five small business owners suffering poor mental health

Rest assured that you are not alone if you are having sleepless nights worrying about what the future holds as the current Covid pandemic continues to affect business owners.

New research has revealed that four in five small business owners report experiencing common symptoms of poor mental health at least a few times a year says Mental Health UK.  Inability to focus is most commonly reported by small business owners, followed by anxiety, disrupted sleep, panic attacks with over a third reporting symptoms of depression.

The ongoing Covid-19 crisis appears to be exacerbating these problems amongst small business owners. When asked whether they’ve experienced issues with their mental health since the pandemic began, over one third (35%) have experienced panic attacks and half have experienced symptoms of depression. More than three quarters (78%) of SME owners said they’ve been worried about cash flow during the pandemic – the most significant concern out of all the respondents.

The mental health of small business owners’ risks getting worse without support and an understanding of what they can do and what options there are.

Brian Dow, Chief Executive of Mental Health UK, said “It’s an incredibly tough time for small business owners, with increasing economic uncertainty and disruption impacting not only the health of their business, but also their own wellbeing and resilience as they try to weather the storm.”

If you are concerned and are worried that your health is being affected then please pick up the phone for a chat with a qualified professional at SWBR. It won’t cost you a penny and could result in some much-needed peace of mind. Knowledge is everything and you could just find that understanding what options you have could result in a better night’s sleep for the first time in a long time.

Pay As You Grow: Bounce Back Loan (BBL) Update

Pay as you grow

The Government is asking banks to offer more flexibility to customers when BBL repayments are due to start.

Called the Pay As You Grow (PAYG) approach, it will offer the following concessions:

1.           An extension of the term of the loan from six to ten years;

2.           The opportunity for borrowers to make interest only payments for six months for up to three times during the term of the loan;

3.           Up to six months payment holiday where no repayments are made.

The third option will now be available to everyone with a BBL from their first repayment, rather than after six repayments have been made.  This means that businesses can opt to make no repayments on loans until eighteen months after they originally took them out. 

How could these changes affect your cash flow?

The option to increase the term of the loan from six to ten years would almost half your monthly repayments.

The three periods when you can opt to make interest only payments for six months would further reduce the impact on cash flow as would the ability to request a pause in repayments for six months.

How do you access these PAYG features?

In a Press Release announcing these changes on 8 February 2021 the Treasury said:

Lenders will proactively and directly inform their customers of Pay As You Grow, and borrowers should only expect correspondence three months before their first repayments are due.

For more information please click on the PAYG logo above