Burying your head in the sand is not an option – plan ahead.
It is not an exaggeration to say that we are in unchartered waters with the present and ongoing Covid-19 crisis. There are very few things that allow us to fully understand the implications of the present crisis and its impact on business and the wider society.
Things are changing on a daily basis and it is fair to say that we do not yet know how long the present crisis will last or ultimately what the lasting impact will be.
You will have seen the far-reaching measures proposed by our government and governments across the globe with a view to assisting businesses at this difficult time. We are yet to see how impactful those measures will be but fundamentally, businesses are seeing significant issues in the here and now. Cash flow is likely to be the single greatest issue for businesses, both with the supply chain issues, movement of people and reduced spending both by consumers and on a business to business basis. We would recommend that businesses take a close look at their cash requirements for their ongoing trading. Businesses should also look at regular and discretionary expenditure and ask the question, “do I really need to spend this money now?”
Businesses will also have to look at their supplier network. Will the supply chain hold up and will businesses be able to get the products, parts and raw materials that they require to continue to trade?
Further disruption will come both from the measures to reduce potential transmission of the virus by preventing free movement of people and the closing of schools. This will undoubtedly lead to customer volume disruption but also potential labour shortages within businesses employee groups. There will be people who are ill, people who will need to self-isolate, people who will need to stay at home to look after children and/or dependant relatives. Hopefully most businesses will have a business continuity plan in place (“BCP”), if they do not, we would advocate looking at this as a matter of urgency.
When looking at viability going forward, it is also important to keep stakeholders in mind. It is likely that the banks will be “sympathetic” and there will likely be statutory measures to prevent certain sorts of enforcement. However, it is always sensible to be open and engaged with your lender and other stakeholders.
We at Shakespeare Martineau have a specialist national team of advisory and restructuring professionals that can help you through these difficult times. If we could give one piece of advice, it would be don’t bury your head in the sand and have early conversations with our team about what options are available and how we can help your business.
As with the virus (and most other medical matters), the earlier an issue is diagnosed the more options are available by way of treatment.
To discuss any of the above issues please contact Andrew Taylor, National Head of Restructuring on 0121 631 5326 or 07734 553 369, Michael Mulligan on 020726 44432 or 07976 414259, Sean Moran on 0116 631 5325 or 07834 129693. We have a team of specialists in our restructuring team and wider corporate and commercial team ready to help.