And they are warning that cash will be king in the coming recession, urging companies to protect their cash reserves.

Derek Forsyth, head of business recovery and insolvency at Campbell Dallas, said that insolvency practitioners in Scotland are helping firms to slash costs and retain as much cash as possible, whilst trading is restricted, rather than taking formal insolvency appointments.

He stressed that cash will be the dominant currency in a stressed economy with cash in the bank, mattering more than ever for businesses as the key to survival and recovery in the coming months.

Mr Forsyth said: “Companies that can retain their cash reserves will have a much better chance of survival. Many of the traditional ‘triggers’ for formal insolvency, such as banks, HMRC, and asset funders have been temporarily put on hold, and for many companies, and the combination of CBIL loans and furlough of staff has provided short term relief.”

However, he concluded that for many companies, the grace period will be temporary and a significant number of businesses will just not survive.

Donald McNaught, partner and head of restructuring at Johnston Carmichael, told Scottish Financial News that the firm is yet to see a “significant spike” in insolvency work, but he anticipated that this is ‘very likely’ to change later in the year.

He pointed to the government measures as a potential contributing factor for the lack of an insolvency spike so far. However, he warned that when the surge in insolvency work does arrive, it could “translate into a number of major issues including job losses, a loss of value in underlying businesses and assets and a poorer return than normal to creditors”.

He added: “Any of these issues could, in turn, create a domino effect, impacting the wider Scottish economy, which could be amplified in the current climate. What’s more, there is no clear point at which this snowball would potentially stop rolling, with banks, local authorities and Government all potentially impacted.”

Blair Nimmo, partner, UK head of restructuring and global head of insolvency at KPMG, is slightly more optimistic. He said that while there will undoubtedly be a rise in the number of insolvencies in Scotland, it will not be as dramatic as anticipated.

In a what could be a calm before the storm, Mr Nimmo revealed that KPMG had actually seen a drop off in insolvency enquiries and insolvency-related issues. Rather, firms have been seeking support and advice on what options are available.

He said that firms have mainly been focussed on cash reserves and mothballing, rather than looking into insolvency. Over the last few weeks, KPMG has seen a lot of firms have mothballed their businesses so that they can utilise the support schemes implemented by the UK Government. He pointed out, however, when they come out of the schemes, some firms may not be able to get their businesses up and running again.

Mr Nimmo told Scottish Financial News that those who are most likely to fail were firms which were stressed before the coronavirus outbreak, as the current economic conditions will accelerate problems which were already there and the ability for such firms to access the necessary cash necessary to survive is going to be difficult for companies who were stressed before COVID-19 in the first place.

He added, however: “I’m not convinced it’s going to be the absolute armageddon some commentators are convinced it’s going to be.”

Eileen Blackburn from French Duncan echoed such sentiments stating that the support made available by the UK and Scottish Government will be helping to keep some businesses afloat for the time being, and one might expect that support schemes will continue for as long as the lockdown period lasts.

Claire Massie, partner at Pinsent Masons and head of the firm’s banking & restructuring team, added that the government measures are an attempt to mitigate the most damaging impact of COVID-19 on businesses. She said: “With a combination of measures including suspending the wrongful trading provisions for a three month period, the introduction of a moratorium/breathing space for businesses and a new restructuring plan, all aimed at supporting business and limiting the risk of insolvency.”

However, Ms Blackburn warned that problems will arise when the government support measures come to an end. She added: “If a gradual easing of restrictions occurs, which seems almost inevitable, then many businesses will sadly fail due to the time delay before revenues return to anything like pre-coronavirus levels.”

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