Coronavirus

RSM calls for extension of Corporate Insolvency and Governance Act

RSM has urged the Government to extend the Corporate Insolvency and Governance Act by a further three months, in a bid to bolster businesses in the wake of the pandemic. 

The audit, tax and consulting firm said the move would give businesses more time to strengthen their debt positions and operating models ahead of an “anticipated uptick” in trading in the lead up to Christmas.

The firm has now written an open letter to Rishi Sunak, warning of the “likely fate” of many UK businesses if the support measure is not extended beyond its current cut-off date of 30 September.

Paul Newman, partner and head of leisure and hospitality at RSM, said: “Make no mistake – sticking to the current timeline will be the death knell for vast swaths of consumer-facing businesses. 

“But if these companies can be given a chance to take advantage of an economic upturn, and importantly the Christmas period, the government needs to extend the Corporate Insolvency and Governance Act easement. By doing so, it will back these businesses and give them a chance to extend their recovery period. Without it, most simply will not survive.”

He said that a three-month extension may also give businesses the time to find a “more permanent” restructuring of their debt positions once new operating models are better known.

He added: “No industry has been more affected by the Coronavirus pandemic than the consumer-facing sectors. The Chancellor’s measures have given the industry much needed breathing space and the opportunity to emerge in a Covid-secure way as lockdown relaxes. 

“The UK’s high street retailers, casual dining outlets and travel businesses are the front line of our economy, with industry and financial markets reliant on consumer spending. A three-month extension could – just could – be the life-blood these businesses need to allow them to survive and contribute to the UK’s wider economic recovery.” 

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