Boards of struggling companies (and their auditors) must navigate choppy waters in terms of finalising their audited accounts in the midst of a global downturn.

By James Chesterman, Dominic Newcomb, Helena Potts, and David Cooper-Parry

The global downturn triggered by the COVID-19 pandemic continues to pose challenges to significant swathes of the worldwide economy. Companies across many industries and geographies have seen a precipitous decline in their operations and turnover.

Irrespective of liquidity positions, directors will also need to focus on whether they are able to publish “going concern” accounts and what their auditors’ opinion on those accounts will be. If directors can conclude a company is a going concern at the time of the audit, but harbour doubts about the future, this must be disclosed in the notes to the financial statements. This in turn can impact the basis on which both the accounts are published and the auditors’ opinion thereon prepared.

To raise new debt at a time of low liquidity, leveraged and other sub investment grade companies must navigate restrictions in loan and bond documents.

By James Chesterman, Helena Potts, James P. Burnett, and Karan Chopra

Many companies are seeking funding to survive the currently unquantifiable impact of COVID-19. This blog post will consider issues arising in leveraged and other sub-investment grade structures from which all commitments are drawn, or are otherwise not available for drawing, and therefore new funding sources are required. In these structures, contractual restrictions and high leverage can make it harder to accommodate new debt.