At Cloudhelix, we have a long-standing relationship with many of the best-known names in the Insolvency industry. Over a (still virtual) glass of wine or two, we got them together recently and asked what they thought might happen in the industry this year - under the Chatham House Rule.
We started by discussing the impact of the pandemic and the effects of government support.
The general consensus held that the government support had just kicked the can down the road, so the impact was yet to be felt in full. When assistance comes to an end (not only in the UK) then weaknesses will be exposed.
“When government support ends there will be many insolvent companies, the outlook for personal debt is also very pessimistic. With borrowing at such a level, fiscal policy will need to tighten so tax increases and spending caps will also follow.”
One attendee summed it up succinctly, “Growth will be flat, taxes will rise, unemployment will rise significantly…it’s something we are going to be paying for many years to come.”
There was a diversity of views. From the broadly optimistic “Further contraction in the early part of 2021 followed by slow growth” to the more pessimistic “Devastating - many more people pushed into debt” and “A series of mini tsunami's leading to a potential recession in some or all of the UK economy.”
But there was a recognition that, for the insolvency industry at least, there would be an increased opportunity. “For the country, the impact will be massive. Professionally, it will boost business” and “it will create significant opportunities for restructuring & insolvency”.
Another attendee pointed out that “The current, more patient and collaborative atmosphere will also probably reduce, leading to enforcement of security and legal action.”
The discussion then moved on to whether practices had already noted increased business levels.
Just under half said they had identified a rise in insolvency and business failures as a direct result of the ongoing lockdown.
“We have seen a considerable increase which will trickle down into personal insolvency via personal guarantees provided by a director”
And all agreed they expected to see an increase soon “not yet, but that's due to the government support available. The retail and hospitality sectors are going to struggle to find their feet again…but expect it in late-2021”
As a technology company, we’d have been remiss if we hadn’t asked them about how they believe technology will help them handle the increased workload.
It was broadly felt that working from home would continue but that companies would need to invest more to improve the experience, including adopting better remote collaboration. “Anything that facilitates remote working, a 'new' communication method other than emails (which are now the death of productivity)”
For some, using automation to create a “document management system making efficiencies as well as robotic tools and analytics for digitisation…” was a priority.
Underpinning these coming changes is the pressing need for a more agile infrastructure to enable faster digital transformation.
Keep an eye out for our next insolvency industry event – if you work in this space and would like to attend, simply contact us and we'll be in touch in due course.
Posted on Apr 23, 2021