It was the best of times. It was the worst of times…
27th March 2020
Truly exceptional times and exceptional measures. Huge parts of our economy (such as tourism, travel and leisure) in meltdown – meltdown that may take years, even decades, to recover. Other parts uncertain, nervous and insecure. And, bizarrely, some businesses operating above capacity, whose only issue is self-isolating employees.
So, what does this all mean? To be honest, I don’t know. But for many of the people getting in touch now, I’m relying on what I have learned in the insolvency/business recovery field since I started doing this work in about 1985.
My golden rules are:
1. Cash is king – nothing else really matters just now. In uncertain times, everyone preserves cash and minimises credit as much as possible. As an example, we’re here to help – but I’ll ask for cash up front, as I don’t want to help and become an unpaid creditor.
So, don’t chase that order only to become an unpaid creditor; be very careful of unplanned price competition; and check your own terms and conditions and those of your suppliers.
2. Look out any personal guarantees you have been asked to sign in the past and think carefully before signing any now.
3. You’ve spent years building up your business. Perhaps it was your retirement fund. Is all now lost? Well, possibly yes: but, hopefully, no. The chances are that there will be good bits and bad bits of the business: once these are identified, can the good bits be preserved and the bad bits disposed of somehow?
4. Act quickly. I don’t mean today (although that would be good) but not this time next year. If things are obviously bad, then unless you are operating in one of the industry sectors which will recover quickly (and I’m not sure what they are) then persevering with the bad bits potentially means threatening the future of the good bits and the people involved in it.
5. Take advice. Yes, I would say that anyway, but objectivity is critical at a time like this.
6. Lastly, whatever happens is unlikely to be your fault. These are truly exceptional circumstances.
We are here to help. I know that everyone is saying that just now – but we mean it!
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at March 2020. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.