Wylie & Bisset advises professionals with individual business clients in financial distress

Chartered Accountants Wylie & Bisset is advising professionals and other intermediaries with business clients concerned about financial distress resulting from Covid-19 restrictions to consider a payment plan through the Debt Arrangement Scheme (DAS).

A statutory debt management plan introduced by the Scottish government, a DAS gives clients an opportunity to stretch out a financial dip or debt extension because of Covid-19 and to even out their liabilities over several years.

Assets are not considered, so houses and cars are unaffected by the DAS. Under the scheme, the client pays back the full amount due to creditors based on balances owed when the DAS is effective. Any subsequent interest and charges which would otherwise be payable are frozen. Repayments are typically monthly from income.

Gordon Chalmers, partner and insolvency practitioner at Wylie & Bisset, said that, if approved, a DAS will allow all debts of the client to be repaid over a number of years. If creditors have started a legal process for recovery, then a DAS can stop this action going further.

“Directors of SMEs can have personal liability for loan accounts or company debts that they have guaranteed,” he said.

“These may have been crystallised and called up because of their company’s failure due to Covid-19. If the client is now able to secure regular income, then they can spread these debts out over several years.

“We have successfully implemented cases where directors have been pursued by liquidators in respect loan accounts – one for a debt of £120k. Another example is a start-up funding liability personally guaranteed by a director for his collapsed company.”

Chalmers notes that there will also be employed professionals who have suffered reduced wages from furlough/salary reductions, or a period of unemployment.

“These individuals may have had a level of debt that was perfectly manageable pre Covid-19, but due to an income reduction and/or debts incurred to sustain income levels now have repayment problems. DAS allows them to reschedule this.”

Wylie & Bisset is advising professionals with business clients experiencing financial distress resulting from Covid-19 restrictions to consider a Debt Arrangement Scheme (DAS) and to contact them for details about the scheme.