9 November 2021: It has been reported that the UK corporate debt went up by £1.9tn to £6.6tn in 2020. It was also reported that the vast amount of this debt is irrecoverable. Almost 52% of businesses are now saddled with debts they cannot afford to pay. The good news for suppliers/banks/HMRC waiting to be paid is the reopening of courts in September, allowing them to take action and chase payment. These suppliers have to be commercial when assessing how much of their debt they will recover and how long it will take to receive payment.
‘Zombie’ companies that owe money to creditors have been an issue since the recession more than a decade ago. When the pandemic hit, many took advantage of the government backed loans and paid off debt they had accumulated from newer lenders on the market. This gave them time to continue to bury their head in the sand but now they will be forced to wake up to the situation and take action.
The serious question that these businesses need to answer is do they have a viable business. Can they ride out the winter storm and recover from the crippling debt position.
Recent data also revealed that some sectors are in a more of a vulnerable position than others, specifically those businesses in real estate and property, in hotels and accommodation and bars and restaurants are all now unlikely to be able to pay their current liabilities.
If you are a business that is crippled with debt, with cash rapidly running out and would like to discuss the options or a business that wants to reduce risk and take action sooner rather than later to recover what is owed to you, please contact one of our management team immediately.