Extend moratorium on winding-up orders, says accountants Mercer & Hole
Struggling businesses once again face the possibility of being wound when restrictions on creditors presenting winding-up petitions for unpaid debts are to be lifted at the end of December. But just as the furlough scheme has been extended to the end of March 2021 and the wrongful trading suspension extended to the end of April 2021, so too should the winding-up restrictions be extended into next year, says accountants Mercer & Hole.
The government should, says Dominic Dumville, a partner in the Corporate Restructuring team at Mercer & Hole, announce an extension of the restrictions on winding up petitions well in advance of the Christmas break giving distressed businesses every opportunity to reach the inevitable economic recovery.
“The second lockdown and the new three-tier system has added further misery on the highly stressed retail and hospitality sectors and the December rent quarter will be a litmus test for both landlords and their tenants.
“But despite the gloomy news following the collapse of the Arcadia Group and Debenhams there are glimmers of hope on the horizon, with vaccination programmes to start before the Christmas break and ramp-up as we head towards Easter 2021.
“We would urge the government to extend this moratorium until March 2021 allowing businesses to use the Christmas and New Year trading window as an opportunity to rebuild in anticipation of a late-spring or early summer recovery. A further breathing space would be sensible and an early announcement would put an end to uncertainty and speculation.”
Dominic adds a word of caution. “Businesses need to understand that any further extension to this moratorium on winding-up orders cannot continue indefinitely. Businesses that are struggling because of the COVID restrictions should take advice as early as they possibly can to explore ways to restructure and rebuild their business.”
