From his background as a Belgian bankruptcy receiver, Philippe Termote provides us with his view on distressed companies in Belgium and the trends he forecasts for the end of the COVID pandemic.
COVID 19: a game-changer
Sometimes events can be as unprecedented as what happened from March 2020 from a business perspective. Businesses across the world faced lockdowns, falling revenues and sales, unpaid bills and new ways of remote working for staff. Everywhere, it was the small and medium-sized companies that were the most exposed and affected.
From 2021 supply chain problems and shortages of materials affected the global economies. Rising inflation (with exploding gas and electricity prices) next to exploding real estate prices seem to be becoming the economic trend in 2022. Secondly, the expected interest rate rise — on which no one really dears forecast the effect on the global economies — seems to be the second issue (apart from geopolitical economic factors like international crises).
Although the pandemic wasn’t bad news for everyone. Companies that had invested in technology fared better and in some cases business boomed like the pharmaceutical sector. Elsewhere, many firms in all sectors were quick to adopt new technology models for business operations, which included the use of mobile meeting apps, file sharing and using online apps and channels for sales, service delivery and marketing. The office real estate sector changed for good since homework will stay.
No bottomless state aid
To help companies survive the crisis, governments unveiled packages to help endangered businesses, trying to provide damage limitations to their economies. In Belgium, the government unveiled a 34 billion euro package of state aid to help businesses. Legal professionals working in the insolvency sector in all jurisdictions suddenly had to keep up with new legislation being rushed through by different governments in an attempt to adapt their legislation to the pandemic challenges and to try to prevent their companies from going illiquid or worse, bankrupt, with even greater economic damage for the country and jurisdiction as a result.