# How to Address the Imbalance Sheet Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2021-08-18 Category: BUSINESS Category URL: https://financedigest.com/category/business Meta Title: Navigating Debt Driven Stabilisation Initiatives for UK Meta Description: Discover how UK corporates are addressing increased liabilities and restructuring balance sheets post-COVID-19 with government-backed initiatives. Learn more. URL: https://financedigest.com/how-to-address-the-imbalance-sheethtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/graphicstock-business-concept-global-strategy-virtual-iconinnovation-graphs-interface-sbi-301985122-1736838002312-compressed.jpg) ![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/martin-gray-450x630-1736838002275-compressed.jpg) _By **Martin Gray,** managing director in the Restructuring Advisory practice at **Kroll**_ **Debt Driven Stabilisation** Over the past year the UK corporates have been supported by a stream of government enforced initiatives designed to stabilise and support businesses during the height of the COVID-19 pandemic. Most of the available support has been through various debt products including CBILS, CLBILS and BBLS which are government backed sources of [finance that were made available to eligible businesses](https://www.financedigest.com/finance-management-for-small-business.html "Finance management for small business") through to March 2021. In addition, temporary and permanent [changes in legislation over the last 12 months has sought to provide directors and corporates with additional protective measures which in turn](https://www.financedigest.com/scientists-in-germany-turn-up-heat-on-seagrass-in-climate-change-fight.html "Scientists in Germany turn up heat on seagrass in climate change fight") has prevented a significant level of insolvencies from occurring. The consequence of the various initiatives that have been provided since the outset of the pandemic has ultimately led to a substantial increase in the level of liabilities on the [balance sheets](https://www.financedigest.com/ecbs-villeroy-lays-out-plan-for-shrinking-balance-sheet.html "ECB’s Villeroy lays out plan for shrinking balance sheet") of UK corporates. This necessary liquidity has largely been obtained through extending credit lines with HMRC, suppliers, [landlords and increased](https://www.financedigest.com/4-tips-for-landlords-to-increase-rental-property-profits.html "4 Tips for Landlords to Increase Rental Property Profits") bank borrowing. All of which must be repaid by [businesses over a relatively short period of time and at a point when there remains](https://www.financedigest.com/iran-open-for-business-but-caution-remains-the-watchword.html "Iran: ‘open for business’ – but caution remains the watchword") an inherent level of uncertainty over the outlook of the market. **What Next?** It is critical that corporates maintain regular [communication with their key stakeholders to ensure they all remain informed and supportive](https://www.financedigest.com/strategic-budgeting-ensures-success-of-community-support-programs.html "Strategic Budgeting Ensures Success of Community Support Programs") of the direction being taken. It is imperative that directors proactively [plan for the challenges](https://www.financedigest.com/ikea-plans-new-u-s-stores-in-2-2-billion-push-to-challenge-walmart-and-wayfair.html "IKEA plans new U.S. stores in .2 billion push to challenge Walmart and Wayfair") ahead as they navigate their way out the other side of the COVID-19 pandemic. As they do so it is important to consider the make-up of their balance sheet, how it has evolved over the past 12 months and what actions [need to be taken to address](https://www.financedigest.com/if-the-nation-backs-fintech-we-need-to-address-a-few-things.html "If the nation backs FinTech, we need to address a few things") that imbalance. In most circumstances, the amount of current liabilities has disproportionately increased to a [point where the level of support from these stakeholders has been maximized and the expectation that it would actually begin to unwind within a relatively short period of time](https://www.financedigest.com/finger-pointing-helps-no-one-it-is-time-for-retailers-energy-providers-and-government-to-band-together.html "Finger-pointing helps no one: it is time for retailers, energy providers and government to band together"). However, realistically this may not be possible for most corporates depending on the sector, liquidity status and [profitability levels](https://www.financedigest.com/delta-sees-return-to-profit-as-travel-demand-hits-historic-levels.html "Delta sees return to profit as travel demand hits ‘historic’ levels"). Therefore, where necessary, directors should [consider the options](https://www.financedigest.com/cryptoverse-is-bitcoin-out-of-the-woods-consider-the-options.html "Cryptoverse: Is bitcoin out of the woods? Consider the options") available to restructure the balance sheet to become more aligned to the cash flow needs of the business. This may include reducing /normalizing their current liabilities with a more [manageable longer-term debt solution](https://www.financedigest.com/quality-and-compliance-management-solution-market-to-rise-at-a-high-cagr-of-9-4.html "Quality and Compliance Management Solution Market to rise at a high CAGR of 9.4%"). This could be possible through traditional [sources of finance](https://www.financedigest.com/uk-finance-minister-hunt-to-make-statement-at-1000-gmt-source.html "UK finance minister Hunt to make statement at 1000 GMT – source") and/or a recapitalization through equity means. However, in certain circumstances neither of these options may be available or deemed suitable. As a consequence, the government has announced a new Recovery Loan Scheme which is designed to help [businesses of any size as they grow and recover from the disruption of the pandemic](https://www.financedigest.com/5-considerations-when-trying-to-grow-your-business-during-a-pandemic.html "5 Considerations When Trying to Grow Your Business During a Pandemic"). This is a government backed [loan scheme supporting borrowing of up to £10m for individual businesses](https://www.financedigest.com/the-definitive-guide-on-how-to-get-a-bad-credit-business-loan.html "The Definitive Guide on How to Get a Bad Credit Business Loan") and up to £30m across a group. The use of these proceeds can include [cash flow](https://www.financedigest.com/should-your-business-reconsider-invoice-financing-top-tips-on-why-reappraising-this-method-liberates-business-cash-flow.html "Should your business reconsider invoice financing? Top tips on why reappraising this method liberates business cash flow") management, growth, and investment. We therefore recommend directors complete a critical assessment of their business to ensure timely and appropriate action is taken to create a stable platform to [financially support](https://www.financedigest.com/how-to-support-employees-amid-financial-strains.html "How to support employees amid financial strains") and safeguard the longevity of their business. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---