British Steel is in the process of entering compulsory liquidation under the Insolvency Act 1986. This is where the official Government Receiver is charged with overseeing the insolvency process along with a "special manager", which in this case is EY.
“What does this mean for my company and me?”
It is very early days in what will be a very complex insolvency and break up. As a supplier to the company your business is likely to suffer a loss. Normally your business will be an unsecured creditor, because you are a supplier on credit to British Steel. The strong likelihood is that this money will not be recovered and that a very small dividend may be returned to your company in the months and years ahead. It is best to treat this money as gone.
“What does this mean for my cashflow”?
As above, the likely outcome is that you or your company will not be paid. Does this mean you will need to make layoffs redundancies and so on immediately? It is likely that some of the work that is undertaken by British Steel will be picked up by a new owner. Your subcontract status MAY mean that you will be asked to re-tender or supply the new company.
If that is the case, be careful, take advice from your accountants and ensure that wherever possible you obtain credit insurance before supplying services, labour and or materials.
What about the next steps if the Official Receiver wants me to work for the Special Manager?
- Try and get some point of contact at British Steel, EY the liquidators / the special managers, and stick to them like glue
- Register claims
- Register ROT claims if any
- Seek immediate assurances about continued supply or future supplies of goods or services from the special manager.
- Assume historical payments will not be received/will be massively delayed
- Prepare a 12 – 16 week daily/weekly cash flow showing the impact of this –we can help with this.
Need help to pay creditors suppliers and HMRC? We can help right now. Call KSA Group on 0800 9700 539 for assistance. PLEASE BE AWARE KSA IS NOT THE SPECIAL MANAGER
“What if I have already have a time to pay arrangement with HMRC.”? Call us now we will help you assess the options and look at negotiating on your company’s behalf. Read our page on Time to Pay if you want us to help
Your company may be viable but could suffer from a cashflow crisis as a result of this failure, if so contact us and we may be able to arrange a time to pay deal with HMRC and creditors.
Company Voluntary Arrangement
If necessary we can help your company survive a hug loss in sales and cashflow, a deal to write off some debt and spread payments to HMRC and suppliers over u to 5 years may be an alternative solution. Please look at our guides to CVA and call us
Categories: Manufacturing / Engineering, Complete Guide to Creditors Voluntary Liquidation CVL, Insolvency process
The Ultimate Guide For Worried Directors
Worried about poor cashflow? Covid-19?, How to pay wages on pay day? For expert advice on a range of issues download our free Ultimate Guide For Worried Directors today. Or just call us on 0800 9700539
Please note that the guide includes updates due to Covid-19 For instance there have been some changes to insolvency legislation that limits creditors actions and relaxes rules regarding wrongful trading. A new 20 day moratorium for distressed businesses has also been introduced.