In the final interview of this three part video series, financial journalist James Ashton talks with Chris Newell, a managing director in our restructuring and insolvency team about how companies will deal with paying back government support loans when many have not yet bounced back.

The video and a transcript of the interview can be viewed below.

James Ashton: So many companies took government support during the pandemic Chris and now it's time to start paying back those loans. Is that coming as a shock to the system?

Chris Newell: I think it has. So, I believe that we've got a bit of a perfect storm coming for companies whereby the government support tapers away, so with the furlough that's going to end at the end of September, I don't believe that's going to be extended, and plus on top, companies have got to start paying back their loan repayments that have kicked in now and through the bounce back loans or through the CBILs loan scheme. On top, there's a lot of HMRC arrears that will have built for many companies and HMRC will want them to repay these debts on a monthly basis, so there's a lot of debt that's built up on balance sheets, and the monthly repayments are going to hugely increase over the coming months, so it's a huge issue and business owners will need support on this and this is something where Quantuma can assist.

James Ashton:  It feels like all this is happening quite quickly Chris, isn't the problem that many of these companies simply haven't bounced back yet?

Chris Newell: Yes, many, many, haven't bounced back as quickly as they'd have thought. Particularly in the leisure industry, retail and events, and there really hasn't been the kind of the bounce back that they expected and so it is a huge issue, it has come around quickly and support is going to be needed.

James Ashton: And what would you say the options are that are open to them? There are clearly more loan schemes now and I guess these companies could also ask for an extension for existing debt?

Chris Newell: Yes, there's another loan scheme called the Recovery Loan Scheme. It is a bridge between sort of, what's happened in the bounce back loans and the CBILs to normalize lending. There's a real focus from funders on the recovery loan scheme on affordability and I think this is where many businesses are going to struggle, and because lots of them have so much debt on their balance sheet, so it's going to be a huge issue.

James Ashton: And what do you hear from creditors? I'm thinking about the banks, I'm thinking about the landlords because of course they haven't been able to pursue debts for quite a long time now.

Chris Newell: This is a huge issue. So, creditors haven't been able to take any action at the moment because companies have been protected by the moratorium that's in place. That won't last forever and when that falls away there's a lot of pent-up demand from creditors who want to take legal action to recover monies that are owed to them. So, I think that we are going to see a significant kind of rise in companies taking action where they’re owned money, and so this is going to be, you know, incredibly kind of important to understand that this is going to happen and for companies to take early advice.

James Ashton:  And of course, then there's the Tax man. Are you seriously saying that HMRC could tip some of these struggling companies over into administration? 

Chris Newell: What we've seen in the past, in the 2008-2009’s, HMRC was incredibly supportive utilizing the Time to Pay scheme then. HMRC are again, from what we've seen, being supportive and they will put in place Time to Pay schemes and they will stretch debt over a period of months, if not years, but we can't forget that HMRC will not apply any debt forgiveness - they will want their money back and so that's important to remember, and so this is what's kind of incredibly important to get the cash flow forecasting right for businesses because there's lots of people that they've got to pay back.

James Ashton: Very interesting Chris, thanks so much.

Chris Newell: Thanks James.