Following the referendum outcome Andrew Tate, president of R3 (the Association of Business Recovery Professionals), has stated that “there is clearly going to be a period of huge economic uncertainty” and has requested that all members (Insolvency Practitioners, lawyers and advisors) “step up to help businesses and individuals”.
The Chancellor has already referred to companies choosing not to expand and take on new staff as a result of the uncertainty. The longer the uncertainty the worse matters are likely to become for businesses of all sizes as foreign investors, suppliers and customers all take stock and see how matters develop. This may lead to lost orders from customers, lost tenders or opportunities as competing companies in other countries become “safer” options not to mention currency fluctuations which will affect every company that trades with Europe.
Even the big banks are having to review their positions with regards to existing deals and potential future deals and investments as they look to protect their positions in the face of a potential downturn.
Unfortunately it is inevitable that the combined effect of these and other factors will lead to a number of companies to question their continued viability. This will in turn lead to companies either slowing any expansion plans or restructuring in order to minimise losses or potential losses.
The number of business insolvencies which has dropped pretty steadily since 2009 is going to rise. This will result in further increased burden on the public purse in terms of redundancy pay outs.
Given the recent changes to insolvency legislation and the increased potential liability to directors it is important that directors ensure advice is taken promptly to minimise this liability and also maximise the opportunities for restructuring, refinancing and saving businesses and jobs.
Overall insolvency professionals and advisors expect to be much busier, at least whilst the uncertainty remains, but possibly for much longer.