The turnaround alternative

East Midlands based Orchard principal Nagesh Bhayani outlines the work that he has been doing to provide a real alternative to insolvency for troubled businesses.

You may need to whisper it but insolvency levels have been remarkably low given the seriousness of the recent economic downturn. This may be because the banks and HMRC, who are often the main instigators of insolvency proceedings, have not been so keen to do so this time around.

Indeed many banks, while maybe not extending as much credit as the business community would have liked, have been more supportive of businesses than has been recognised. Meanwhile the time to pay initiative has seen HMRC provide a useful source of finance for businesses looking to get back on track.

However there are signs that HMRC are now less accommodating as regards time to pay applications, and are becoming more demanding of businesses that do not keep to agreed payment plans. Add this situation to the oft quoted statistic that businesses are more at risk coming out of a recession than during one, or even the possibility of a “double dip” recession and you can see why insolvency practitioners are, in the nicest possible way, still hopeful of a good year.

So what support is available to businesses who feel they may be at risk of becoming insolvent but still believe they have a chance of survival if they take the right action? How can directors, who genuinely believe that with the right expert help, their businesses can become viable again, ensure that they comply with their legal obligations as regards trading while insolvent?

Insolvency practitioners can help, but many directors are afraid to talk to them, seeing them as an option of last resort. Consequently they are often not called in until it is too late. Therefore it is turnaround professionals, who have the right training and experience to put in place the necessary actions within the correct legal framework, that are likely to provide the best way forward for companies in trouble.

It is against this background I have been working on a unique collaboration with the Liverpool Business School to develop a post graduate certificate in Business Turnaround Management. The programme enables students to combine a robust theoretical foundation with the practical knowledge required to meet the challenges of real world business turnaround. Initial feedback from students has been positive with one student saying “I have certainly acquired new skills and the confidence and credibility to go on to support struggling businesses”.

I have personally written and delivered two of the course modules and am also currently conducting a major study in this field. I passionately believe that turnaround will provide many businesses with a viable, and much better, alternative to insolvency.

Nagesh Bhayani

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