Grant Thornton Partner Nicholas O’Dwyer discusses Directors’ legal requirements during these challenging times, explaining what Directors need to know about the restructuring process and what they should do next.
Ireland has come a long way since the property crash of 2009. At the start of 2020 the economic growth forecast was 3.5% and unemployment was at an all-time low of approx. 5.2% – the country thought its most difficult times were behind it.
Nobody anticipated COVID-19, and Governments and the wider business community were not prepared for the economic impacts. Many countries may be heading for a very sudden and unique recession. An already challenging global economic outlook will see unprecedented disruption as the economic impact of the pandemic take hold. The current outlook is very different to that of January 2020.
- The International Monetary Fund has projected that the global economy will contract by 3% in 2020. In 2008 and 2009 the global economy contracted by approx. 1%.
- Irish GDP is projected to contract by nearly 8% in 2020.
- Irish unemployment in May 2020 was above 26% (COVID-19 adjusted monthly unemployment rate).
- The Exchequer recorded a deficit of €7.5 billion for the year-to-date May 2020, more than double the deficit of€3.2 billion recorded in the same period of last year.
- More than 50,900 businesses have signed up to the government’s Wage Subsidy Scheme.
- Over 22,000 payment breaks granted by the banks to SMEs.
- Sebastian Barnes, the chair of the Irish Fiscal Advisory Council, recently said that the State is facing the “most dramatic” recession in its history.
Taking all of this into consideration, how do Directors and senior management teams successfully navigate your businesses through this period of uncertainty. Not all businesses will survive and there are many that were already challenged at the start of the pandemic. We have outlined the pertinent points to consider in order to make decisions which are in the best economic interest of your business. Key to this is ensuring the continued support of stakeholders, whilst embracing the economic challenges faced.