Scottish directors need to act now to avoid business closures, says leading lawyer

Scottish directors need to act now to avoid business closures, says leading lawyer

Gordon Hollerin

A lawyer has urged directors of Scottish businesses to use the full extent of UK insolvency laws to avoid ‘inevitable’ business closures in the coming months.

Gordon Hollerin, partner at Harper Macleod, was part of the firm’s team which successfully helped High Street giant M&Co restructure, the latest in a number of such moves in recent months.

He said: “Current and future economic conditions resulting from the devastating effect on many businesses of the Covid pandemic seem very likely to result in a huge increase in the number of insolvencies in the coming months.

“Throw in the possible disruption to many businesses caused by a no-deal Brexit and it’s difficult for even the most optimistic of commentators to see the future for UK businesses as anything but bleak

“Directors of many businesses may already be bracing themselves for the inevitability of insolvency resulting in closure of their business and redundancy for all employees once current Government support measures come to an end. But this outcome is not inevitable and it’s vitally important for the UK economy that directors understand this.”

Mr Hollerin highlighted the fact that UK insolvency legislation now provides businesses with a menu of options which enable distressed businesses to be restructured and survive rather than be liquidated and close.

Processes such as pre-pack and light touch administrations, company voluntary arrangements, standalone moratoriums and restructuring plans are available can all, in the right circumstances, offer businesses a lifeline to survival and the prospect of future growth and prosperity with business and employment preserved.

Mr Hollerin added: “The prospects of a distressed business being successfully restructured and saved through the use of the right process are particularly strong when, as here, the distress is caused by external factors outwith the control of management rather than any failure in the business itself. The key action for directors is to take expert advice early and then to act on that advice. If directors do that rather than wait for the worst to happen a positive restructuring can be achieved.”

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