Maurice Phelan, head of restructuring and insolvency at MHC, said it was important for companies struggling to pay creditors, landlords or banks to have a realistic plan in place, and that open, consistent and timely communication with creditors was key.
Mr Phelan said that in all recent cases where agreements on temporary or short-erm rent reductions were successfully negotiated, “tenants engaged openly from the outset” and were able to display a clear plan to recovery.
“Failure to engage with creditors creates distrust,” he warned, adding that it could be difficult to win that trust back.
Mr Phelan outlined the options for companies facing debt problems. These include agreeing arrangements with some key creditors outside a formal court process, though this option contains a risk of being deemed an unfair preference.
Another option is a formal arrangement under the Companies Act, that would be binding on all creditors if
Continue reading this atricle at https://www.lawsociety.ie/gazette/top-stories/openness-and-trust-key-for-struggling-companies/