In The News
Article Date: 01 April 2020
ASE Coronavirus Update
As at 1 April there have been no specific further announcements by the Government concerning the core issues that face businesses; loan facilities, meeting liabilities and furloughing of staff.
However, anecdotal evidence is now beginning to circulate as to the effectiveness of the measures announced and in particular the availability of the funding on offer.
In terms of businesses needing support, the banks are overwhelmed. They are trying to support businesses that were lending candidates prior to the crisis but only if they are businesses which in their opinion will pick up quickly after the crisis is over.
There is a heated debate about whether security is required in the form of personal guarantees as the banks insist or not as the Government wants.
The consequence is that cash is not getting through and certainly not in time.
The scheme, as far as it exists, does not appear fit for purpose given the bank “push back” but then given the nature of this crisis, it is difficult to blame any Government or indeed the banks for its efforts to find a workable solution?
The proposed relaxation is some Insolvency rules (wrongful trading, a new short form moratorium similar to the US chapter 11), has led to many companies stopping all payments to preserve cash.
Only time will tell if this succeeds in safeguarding businesses but it is something that appears to have the general as well as widespread support of the motor industry as far as we can tell.
It would appear, at least according to anecdotal evidence that the furlough system will not be in a position to pay wages until at least the end of May.
Accordingly, the Government and banks are working on proposals whereby the banks will extend overdrafts to customers in order to pay furlough payments on the basis that the payments received from HMRC will be used to clear the overdraft facility.
There is no information as to how this might operate so questions about how, when, and why are of interest to us all.
This crisis is not going to be over quickly and it will damage and destroy many businesses and the livelihoods of those who work in them. The Government know this, indeed everyone knows this and everyone is working to try to help reduce the problems that will be caused.
At ASE, all we can do is ensure that you keep an eye out for what we say on this blog. We will continue to offer you the most up to date information we can in the hope that we all come out of the other side in a position to restart at the point we left off.
In case of any questions please contact at Chris.Cummings@ase-global.com
Tel: 44 (0)161 493 1930