Business Support During COVID-19

Businesses across the world are facing unprecedented challenges as the COVID-19 coronavirus continues to disrupt business and hammer the global economy. Many UK businesses have been forced to close as a result of government-enforced social distancing policies, while others have seen demand for their services fall to all-time lows.

While the government has introduced a range of temporary measures to help beleaguered companies during these times, for many these will simply not go far enough and remedial action will be needed to steer the business through this period of upheaval and disruption.

The good news is that there are a number of business rescue and recovery options which can be utilised to help steady your company through these turbulent times and allow it to emerge on a solid footing. Possible restructuring services in the wake of coronavirus are varied, including a process of business simplification to divest non-performing areas of a company, Company Voluntary Arrangements (CVAs) to restructure outstanding liabilities, or placing the company into administration.

Company administration is not a permanent state for a company to be in; rather it acts as a holding stage while a solid route forward is planned. Once in administration, the company is protected by a moratorium, a legal ring-fence preventing creditors commencing or continuing legal action against the company. During these unprecedented times, this breathing space could be vital in allowing a rational assessment to be made as to the future direction of the business, and the necessary time to put this plan into place.

As an added pressure, as a director it is understandable that you feel a huge amount of responsibility for your staff, and are undoubtedly concerned what your current difficulties could mean for your loyal employees. The good news is that business rescue methods – including administration – look to preserve jobs and limit the impact on employees. Should a pre-pack administration be decided upon as the best course of action, all staff will be automatically transferred to the new company through a process known as TUPE – which stands for Transfer of Undertakings (Protection of Employment). This preserves the employment rights of your staff including their accrued years of service and contract terms.

The government has recently confirmed that in instances where employees have been transferred to a newco under TUPE, then they will be eligible for the Coronavirus Job Retention Scheme. This scheme allows employers to claim back 80% of their employees’ salary if the company is forced to furlough them during the current COVID-19 outbreak.

This applies if the selling company has furloughed its employees prior to the pre-pack sale, and also in instances where the buyer needs to furlough employees following the transfer should this make commercial sense.

This step should go some way towards ensuring more jobs can be retained during these challenging times.

At UK Administrators we have helped thousands of companies overcome all manner of difficulties, saving countless businesses and jobs in the process. While COVID-19 brings with it unparalleled challenges to business of all sizes and across all sectors, there are still options out there. If you would like to explore whether company administration could be a suitable step for your business, contact one of our expert advisers today.

Through an understanding of your company and the problems it is currently facing, we can work with you to ascertain whether administration is appropriate, and if so, we will be with you every step of the way, giving your business the best chance possible of survival.