How business debt hibernation can help your business

Business debt hibernation is a government initiative that helps companies, trusts, and other business entities affected by COVID-19 to manage the debts they currently have. New debts will be covered by the terms and conditions your creditors set and we encourage you to be negotiating these in the current environment.

Unfortunately, sole traders aren’t eligible for business debt hibernation. If you are a sole trader and seeking government support, check out the cash flow loans and support page.

If business debt hibernation is right for your business, this is how it helps you manage your debts.
  • You set up an arrangement for your existing debts, eg paying your creditors only a percentage of what you owe them on time and delaying the rest.
  • You get up to a month of protection while you set up the arrangement, meaning most creditors can’t enforce their debts, eg applying for your business to be liquidated.
  • If your creditors agree, you get a further six months of protection.
You still need to pay off your debts in full. Business debt hibernation helps you manage your debts while you are protected but they don’t go away altogether. And it’s only for debts you already have. Any new debts will have the terms and conditions your creditors set. Some debts aren’t covered by business debt hibernation, eg employee wages and debts to secured creditors with a general security agreement.

You can learn more here or get in touch with us to discuss.