Interviewer: Today I'm interviewing Dr.
who is a senior teaching fellow at
Loughborough University in the UK.
Dr. Pond, thank you for
taking the time to talk to us.
So to begin, what challenges are companies
facing and how are they addressing them?
Dr. Pond: From the perspective of
insolvency it's really very logical,
being a lack of liquidity,
the inability to pay your bills,
wages, and suppliers as they fall due.
In fact in the Insolvency Act of 1986
one of the definitions of insolvency.
There will be a lot of
companies out there,
a lot of businesses that
are technically insolvent.
What's being done about them looks
rather confusing at the moment,
as to how people are behaving.
It's not a huge leap of logic,
if your revenues just fall off a cliff,
there is no money coming in and
you've still got loans and
wages to pay,
there's going to be a crunch.
Interviewer: From the United Kingdom
perspective, what is insolvency, what is
the law and what changes are permitted
because of the coronavirus crisis?
Dr. Pond: That's a huge question,
but let's start with the basics.
There are two legal ways
to become insolvent,
one of them is called
the balance-sheet test, and
this is where a company's
liabilities (the money it owes)
exceed its assets,
that's a technical definition.