The coronavirus pandemic has had a substantial impact on UK businesses across the country, from SMEs and sole traders, through to large multi-nationals. From closing offices and furloughing staff, to setting up remote working capabilities where possible (and necessary), the effect of covid-19 is something that few were prepared for, and none have experienced before.
Many businesses have chosen to furlough staff to protect jobs. However, for some this may not be enough to combat the impact of the coronavirus on their business, especially once the government’s furlough scheme comes to an end.
These companies may look towards methods of restructuring in order to protect their long-term survival and ability to operate. Restructuring your business could help increase its efficiency. There are various ways to do this, including focusing on the business that brings about the most profit, and shutting down un-profitable or expensive areas of your company.
Proactive or reactive decision to restructure?
There will have been companies across the UK who were considering a restructure in 2020 long before the spread of the coronavirus. On the other hand, some businesses will have been hit substantially by the downturn in the economy that has been caused by the covid-19, creating a reactionary need to restructure.
If the restructure has nothing to do with the coronavirus outbreak and was a strategic business move, then any subsequent redundancies should go (or have gone ahead) regardless. The furlough scheme should only be used by companies where there has been a downturn in revenue or workload as a direct result of the coronavirus.
Either way, professional expertise can help you get it right first time and support you through this challenging time. Speak to our Employment Lawyers for quick and efficient employment law advice.
How can you restructure your business?
There are a variety of different ways to restructure your business in order to make it more future-proof, and protected against unforeseen circumstances, such as the covid-19 pandemic.
If you have numerous management teams heading up different divisions, you could separate these into subsidiary companies through restructuring. These would mean the liabilities for each division are ring-fenced within the subsidiary and helps to protect the rest of the business should you need to shut down operations of individual subsidiaries.
You might want to think about moving employees around your business to ensure you are maximising their skills, particularly if there are parts of your business that have become busier or quieter during the current climate due to coronavirus.
Any staff, who cannot be moved around to help improve efficiency, can be furloughed if their employment with you meets certain criteria laid out by the government.Read our guide on fuloughing and the government's Coronavirus job retention scheme here
By reviewing your corporate structure and addressing areas that could be combined or streamlined you could save your company some substantial costs. Are there functions or departments that could be outsourced? Could certain departments be combined to sit under a single leadership team? Or similar services that could be combined?
These small changes can add up to large savings for businesses looking to protect cash flow, revenue and profit.
Redundant assets can be sold off if they are no longer required. Or, if you have multiple companies within a corporate group, you may transfer assets between divisions. When taking steps to restructure your business, be sure to consider all the opportunities to streamline or improve efficiency when it comes to assets.
If you’re closing a part of the business, does that result in an office closure or relocating staff? Can offices be sold or used by another part of the business to help make savings elsewhere?
Likewise, if you have a lot of employees working remotely due to covid-19, and it is working well for you as a company, could this be an opportunity for you to reduce your office space or number of desks, by introducing a hot desk policy, with more work from home days across the company.
The government has put various schemes in place to support businesses during this time. The Coronavirus Business Interruption Scheme and the Covid-19 Corporate Financing Facility can help businesses through this time.
Restructuring any debt your business might have is also a way to continue to operate fully whilst reducing the spread of your company’s liabilities. If you have multiple outstanding creditors, you may be able to introduce a Company Voluntary Arrangement. This is a legally binding agreement where you can agree, with your creditors, to postpone payments of debts, or just pay a proportion, smaller than your initial agreed repayments.
How can we help?
Ensuring you choose the right restructuring strategy for your business is essential, especially at this time. It can be a lengthy and time-consuming process, not to mention stressful and mentally challenging at times.
Our team of specialist corporate and employment lawyers are keeping ahead of the curve every day when it comes to advancements in businesses related to the coronavirus outbreak. We can advise you on the most appropriate way to restructure your business, both to protect it from the impact of covid-19 now, and to help it flourish in the future.
Get in touch with the team here to discuss your options and start the process with advice you can trust.