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Call to delay winding-up petitions as companies crash during coronavirus crisis

Retailers Warehouse and Oasis are the latest big names to enter administration as the lock down continues to cause huge falls in retail sales.

And with no end in sight retailers and many other sectors are finding banks and lenders are calling in their loans while landlords are refusing to allow them a rent holiday. The result is a rise in the numbers calling it a day and shutting up shop for good as creditors apply for winding up petitions in the belief their clients are insolvent.

London law firm RPS has called for a temporary halt to winding-up petitions to give businesses a breathing space. Drapers online have reported that already there has been 52 petitions to wind-up retailers in the capital during the crisis.

Grace Whelan for the publication reported this week: “RPC is now calling for a moratorium on these petitions. The move would give retailers ‘a much-needed buffer to help them stretch payment deadlines’ as they seek to mitigate the impact of coronavirus. However, it would also be dangerous for creditors, including suppliers, who could be left even further out of pocket. 

Finella Fogarty of RPC, said: “Even if the winding-up petitions aren’t processed, they scare off [other] suppliers and possible funders and can have damaging effects on businesses.”

Ian Carrotte of ICSM Credit said there was a problem of suppliers being left high and dry when a firm entered administration. He said: “If like Debenhams at the moment the company can continue to trade during administration then some suppliers will be able to recover some of their losses. The worst case is a company simply being liquidated immediately. Companies can and do trade their way back into solvency during administration. During this lock down period there needs to be flexibility as many companies have moth-balled themselves until June or July but they must still keep paying suppliers or communicating with them and paying something to retain their relationship.”

ICSM Credit

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For details for the work of the journalist Harry Mottram visit www.harrymottram.co.uk