Jackie Cooke, Managing Director of our Transport division Scotland, looks at the new restructuring and insolvency reforms being implemented in the UK.
Against the backdrop of the government setting itself up to legislate to update the restructuring and insolvency systems with the aim of retaining the UK’s gold standard regime, I’ve taken a closer look at how businesses are feeling about their prospects, but before I do, I’ll explain more about the reforms themselves.
The updates are a response to both international developments and local issues. Some countries - including Spain and the Netherlands - recently introduced updated insolvency systems and some domestic corporate collapses that have put the UK system under pressure.
The reforms are wide-ranging and will include:
- The introduction of a new standalone restructuring procedure
- A new moratorium procedure
- Prohibiting suppliers from terminating contracts on the grounds of insolvency
- Attacks on "value extraction schemes" by which third parties have been able to strip out value from a distressed business
- Greater accountability for directors of distressed companies
Every quarter we survey around 1,000 SMEs across the UK, asking them a variety of questions, ranging from their confidence in the economy to funding preferences. These are some of our key findings:
- One in 10 businesses are expecting to either contract or close down in the next 12 months
- Accountants remain the most popular source of financial support and advice for close to a third (31%) of business owners
- Late payments are a problem for 42% of businesses, significantly impacting both their ability to trade and manage their cashflow
- For those struggling with late payments, 21% are owed in excess of £40k and 55% write off up to 10% of turnover off because of late payments
- 60% of firms are still finding access to funding a challenge
- 54% expect to seek funding for business investment in the next 12 months