Winter economy plan and extension of insolvency measures: PwC comments

Sep 24, 2020



Commenting on the winter economy plan and extensions to protective insolvency measures,


Steve Russell, Head of Business Restructuring Services at PwC, said: 


“Businesses across the country have largely shown incredible resilience in their efforts to weather the economic pressure driven by COVID-19. It's important to note that the Chancellor’s measures announced today, which are welcome and timely, are deferrals or a rate cut, not waivers. The time will eventually come when businesses have to settle their dues.


“Management teams at companies, irrespective of size, must capitalise on the window that these measures are providing to reassess business models, remove cost and consider the position of key financial stakeholders.


“Key issues include diminishing cash reserves, unpredictable supply chains and significant changes in consumer behaviour. Acting to address these issues now will put firms in a better position to recover. We must avoid a situation where companies are effectively forced to play Jenga with their cost base, risking a potential collapse. A steady, consistent strategy will see companies emerge leaner, but better prepared for long-term survival.” 


Alongside the Chancellor's winter economy plan, extensions to measures put in place to protect businesses from insolvency have also been announced.  


Steve Russell , Head of Business Restructuring Services at PwC, added:


"Our client interactions show that the most at risk sectors remain travel, retail and hospitality but also include automotive, aviation and aerospace. However, the knock-on impact on other key business stakeholders must also be factored in. Key groups including landlords and suppliers, whose financial health is often tied to that of their clients, will all require information and interaction with management as will lenders, credit insurers, and pension schemes. Engaging in early discussions is vital.


“Alongside the range of measures announced today, restructuring mechanisms outside of formal insolvency, such as CVAs won’t come off the table. In fact, with the breathing space provided by the government, the appropriate use of these measures alongside other restructuring tools may prove even more popular over a longer period.” 




Notes to editors


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