Benefits of Engaging with Suppliers/Stakeholders

Stakeholders

During these unprecedented times of uncertainty surrounding businesses, it is now more important than ever that you continue dialogue with your existing suppliers and stakeholders. The Covid-19 pandemic is not a valid excuse to simply ignore creditors and suspend payments.

If your suppliers are not being paid, they are likely to run into cashflow difficulties which may ultimately threaten the viability of their own business.  In these circumstances a more aggressive debt collection policy may be pursued and may ultimately, if your debt is more than £750, result in a winding up petition being issued.

Outset of the pandemic

At the outset of the pandemic the High Court were adjourning all winding up petitions. However, they are now being dealt with remotely where possible, although hearing dates are often many months down the line.

Notwithstanding the actual hearing being some time in the future, the petition itself will be advertised leading to significant disruption for your business, such as your bank account being frozen and possibly your customers not paying their outstanding invoices.

Payments to a creditor

Another problem area is post-petition dispositions i.e. where you make payments to a creditor between the date of petition and the date of the winding up, if in fact the order is made. Such payments are usually void unless a validation order is made by the Court. However, Covid-19 will undoubtedly be a factor for the Court when considering such orders and there may well be good grounds for the debtor company claiming that payments were made in order to ensure continuity of trading during the pandemic.

In order to avoid these complications, you should maintain an open dialogue with your suppliers; it is worth discussing extending credit terms or entering into a payment plan, if required.  This will enable your suppliers to manage and plan for their business too.

Existing finance or loans

If you have existing asset finance or loans, consider extending the terms, to reduce monthly payments, or ask for a repayment holiday. Most lenders will consider a repayment holiday in the current climate.

Not adhering to payment terms or agreeing an alternative arrangement can result in the issue of a statutory demand for payment which, if missed or not dealt with in a timely manner, as a result of Covid-19 can leave your business exposed to the risk of being issued with a winding up petition.

Keep in constant dialogue with your creditors

To summarise, our advice is to keep in constant dialogue with your creditors which should ensure your business avoids being issued with a statutory demand and ultimately a winding petition.

If you wish to discuss this matter further or your company is experiencing financial problems, as a result of the Covid-19, please get in touch to discuss your current situation and the options available. Our skilled and experienced team of Insolvency Practitioners will help you find a solution.

Please call us now on 0330 159 8080 for a FREE initial consultation.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *