Page 9 - BPIF inPRINT Issue 62

inDEPTH

So, how should directors make
difficult decisions about the company?

Do:
» Continue to hold regular directors’ meetings. This can be done remotely
using video or telephone conferencing. Directors should discuss the
financial viability of the company and consider up-to-date and detailed
management accounts. Document the decisions made by the board,
and the reasons behind them.

» Review the position of the company’s creditors and expedite the
collection of debts.
» Keep in touch with your bank and your landlord, if you have one. They
are more likely to agree to payment holidays or payment reductions if
they can see that you are making good decisions for the long-term.

» Keep up-to-date and explore the help being offered by Government
initiatives. The Job Retention Scheme, Loan Guarantee Scheme,
Business Rates holidays and grants are available.

» Consider taking advice. If the company is receiving threats of legal
action or statutory demands, you may need specialist legal advice or
help from a turnaround expert.

» Keep in touch with your trade association – the BPIF have produced a
wealth of detailed guidance and a dedicated helpline for you.

Don’t:

» Rush to cancel orders. Contracts need to be considered carefully to
check for penalty clauses.

» Sell off assets at a knockdown price to gain ready cash without
considering the consequences. You may be inadvertently breaching
covenants with your bank, and if insolvency should follow, such
transactions can be set aside if they are held to be “transfers at an
undervalue."

» Be tempted to transfer assets out of the business to connected
companies or persons. A liquidator will look carefully as such
transactions and has the power to overturn them.

» Prematurely pay out dividends or bonuses, especially if the business
forecast looks weak.

» Worry too much – if you can show that you have recognised your duties
and made reasoned and documented decisions the courts are unlikely
to seek to hold you personally liable.

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