For many businesses, surviving in these difficult times has been, and continues to be, an uphill struggle. The UK economy has in large parts effectively been declared off the road for the best part of a year. For those businesses which were required to pull over at the outset of the pandemic, there have been pockets of activity and false starts here and there which have added to the uncertainty. For those businesses which have managed to keep the engine running, it has not been without challenge and the need to make temporary modifications.

It's been quite a journey and it's not over yet. More twists and turns, diversions and potholes may be encountered in the coming months. However, with the vaccination programme gathering pace and the UK and Scottish Governments unveiling their roadmaps out of lockdown last week, the road to recovery is at least in sight.

Time for a MOT?

A lot of businesses will emerge from lockdown carrying an extra load in the form of loans, payment deferrals and other unpaid costs relating to the period of the pandemic. Even after the lifting of all restrictions applicable to their sector, many businesses will still find themselves on the road unknown. Practices and habits have changed over the last 12 months and the world may never return to pre-2020 "normal".

At the moment, businesses have the benefit of various temporary measures brought in by the UK and Scottish Governments which have effectively created a moratorium on creditor action. Business owners should use the time between now and the lifting of these measures to carry out, or instruct professional advisers to undertake, a full "MOT" of their business and assess whether it is roadworthy for the journey ahead.

New Tools Available

If there is a need for a business to be restructured, the tools available are extensive, provided advice is sought early. Along with the temporary measures to protect businesses affected by the pandemic, two new "debtor friendly" procedures were introduced to UK restructuring law in 2020. The restructuring plan and the new standalone moratorium are both designed to facilitate the rescue of a business and leave the business owners in the driving seat.

We are a proud nation with a tendency to ignore problems until it's too late. In a business context, this can lead to a complete write-off where rescue options would have been available if issues had been confronted at an earlier stage. Seeking advice from restructuring professionals should not be seen as the end of the road. They are often best placed to assist with a rescue plan and get a business back on track.

Almost every sector has been negatively impacted by the pandemic. There will be a level of understanding from creditors and other stakeholders of the need to carry out business "MOTs" and to restructure where necessary. That mood may change though as the UK economy begins to motor again.

In summary, now is the time to review your business and ensure it can cope with the bumpy road ahead. As the protections afforded by emergency support schemes and the moratorium on creditor action tail off, those businesses which have confronted any issues, sought early advice where necessary and carried out robust scenario planning will be well placed to survive and prosper in the post-pandemic recovery.


Louise Laing

Senior Associate

Jamie Nellany

Senior Associate