Although Government supports are currently keeping businesses afloat, business owners question how they will move forward in the absence of these lifelines. Sarah-Jane O’Keeffe examines what business owners can do now to secure their future.

With the introduction and rollout of the vaccines, those living in Ireland now have a degree of hope. As such, the recovery of the economic landscape post-COVID-19 is front of mind. We are now asking two critical questions:

1. what does the future of business look like?
2. how will we transition post-pandemic to the next normal?

‘Hybrid’ working

We have become accustomed to new ways of working, and a full return to the office looks unlikely for certain industries. It seems that hybrid work models are here to stay for the foreseeable future, allowing employees to split their time working between the office and home where possible. Business owners will be aware of this demand for new and innovative flexible working arrangements and will react accordingly. This may involve maintaining office locations but downsizing commercial property. The possible downsizing of office space and exiting of leases must be considered sooner than later, as potential conflict may arise between landlords and tenants.

Business supports

Undoubtedly, Government supports are keeping distressed industries like hospitality, non-essential retail, and aviation in business during COVID-19 lockdowns. However, business owners have questions and concerns, with some wondering what will become of their business when these supports cease.

Understandably, a reasonable level of uncertainty exists, with many business owners worried that the demand for their products or services in a post-pandemic world will be insufficient to service the level of debt that has accumulated since operations were halted. Directors of these businesses should take proactive steps to engage with experts and be aware of their director duties and the restructuring options available to them, such as examinership and the new Summary Rescue Process. The basis of this newly proposed legislation is to help small- and medium-sized enterprises (SMEs) restructure in the face of difficulty, providing access to a cheaper corporate restructuring tool that will give them the best chance of survival. The primary focus of the examinership legislation regime is rehabilitation and job preservation.

While Government supports for business are due to finish on 30 June 2021, they will likely be extended while COVID-19 restrictions remain. However, when they eventually end, businesses – particularly within the hospitality industry – will need the public’s support to help them get back on their feet. With international travel off the cards for the foreseeable future, these businesses will rely on the domestic market. The hospitality industry is a vital element of the economy, and the public will play a central role in ensuring that it thrives again.

Act now

Companies must think about the future and potential issues now as opposed to later when Government supports cease. Companies should seek the relevant restructuring advice and consider possible options now. Also, they must consider lease commitments and perform stress tests on the company’s finances in the current climate and whether it has a reasonable prospect of survival post-pandemic. A restructuring expert, and indeed the examinership process, can guide companies on these issues.

Sarah-Jane O’Keeffe is a Senior Manager at Baker Tilly, a contributor to the recently published book A Practical Guide to Examinership, and Ireland’s first female Examiner.