Alex Jay, Head of Insolvency and Asset Recovery, discusses how companies can protect themselves from rising insolvency risks as businesses begin to emerge from the pandemic and commercial pressure increases.
Insolvency risk can affect businesses and individuals in a number of ways. Markets can turn rapidly – think for example of the recent spate of energy company failures – and can catch you off guard.
Investor frauds never go away
Non-professional investors are often enticed by promises of high returns to place money into schemes that turn out to be scams. These schemes adopt many guises and forms. But do they ever change, and how likely are they to emerge as the expected post-Covid economic uncertainty takes effect? Head of Insolvency and Asset Recovery Alex Jay examines investor fraud and how the insolvency process can help victims recover some of their money.
Increases in fraud and insolvency predicted
Business interruption (BI) insurance protects businesses against loss suffered as a result of a slowdown or suspension of operations. This includes loss of profits, loan payments and certain expenditure, such as rent.
Alex Jay writes for Accountancy Daily on various scenarios for companies looking to restructure their office space in the wake of the pandemic and subsequent re-evaluation of the use of office space.
The Grand Court of the Cayman Islands (the "Grand Court") recently considered the statutory moratorium against commencing proceedings against a Cayman Islands company which has been placed into liquidation. In the case of BDO Cayman Ltd. and BDO Trinity Ltd. v Ardent Harmony Fund Inc.
Rumours that a company is in the zone of insolvency may create a race to the assets, with potential creditors or interested parties commencing proceedings in an attempt to secure payment from the company before its assets are fully dissipated or tied up in the insolvency process. This can destroy the collective value in the enterprise or scupper a restructuring and result in significant duplicative costs.