Covid-19 - legal advice for business

Our daily series of guides designed to offer practical advice to support your business.

Covering considerations for employment, contracts, real estate, health and safety and corporate law.

Many companies will have insurance to cover financial losses when their business is interrupted by an unforeseen event. This extends in some cases to illness; we set out below some areas for companies to consider as they grapple with the challenge of coronavirus.

As we await publication of the Corporate Insolvency and Governance Bill which is expected to include details of the new moratorium procedure and changes to wrongful trading provisions, in a surprise announcement on 23rd April 2020 the government confirmed that the Bill would also include further measures to protect commercial tenants from aggressive debt collection by landlords in respect of rent arrears which have accrued directly as a result of the coronavirus pandemic.

When the prospect of lockdown in the UK started to look like a reality, much was written and discussed about the flood of insolvencies that would inevitably follow. Whilst most office based professional service businesses could probably adapt with staff working from home, how could shops and restaurants possibly survive this? Surely there would be an avalanche of work for IPs and insolvency lawyers.

On 27 April 2020 the Chancellor announced yet another scheme to assist smaller businesses who are having difficulty accessing measures currently in place.

On 16 April Companies House announced that it was temporarily suspending its policy of striking off companies that do not comply with their legal responsibilities, such as filing their accounts on time or failing to register a change in registered address. This is an additional measure to help businesses struggling to cope with the financial and administrative pressures caused by the coronavirus pandemic, coming hot on the heels of the 3-month extension to the filing deadline for accounts.

There are lots of quotes doing the rounds at the moment. A particular favourite is one attributed to Lenin: “There are decades when nothing happens and then there are weeks when decades happen”. This feels particularly apposite at the moment while we experience a strange juxtaposition of everything but nothing happening.

The COVID-19 outbreak has already had a significant impact on the performance of business to business contracts across the country. The cancellation of events, frustrated supply chains and inability to perform services has left many businesses in a precarious position with ongoing overheads and limited income.

We are all aware that the unexpected and immense move towards home working undertaken as a result of the Covid-19 pandemic has presented a variety of challenges to organisations across every sector.

All businesses are now operating in uncharted waters. The government is reviewing its support for businesses on an almost daily basis and, last weekend, the Business Secretary announced a proposed relaxation of the law around ‘wrongful trading’ for 3 months.

The current lockdown and social distancing measures introduced as a result of the coronavirus pandemic mean that courts are having to adjust to more flexible ways of operating, assisted by greater use of video and teleconferencing technology. Guidance of how this will work in practice for insolvency proceedings has been issued via the Temporary Insolvency Practice Direction.

If you purchased business interruption cover (BI), you might have insurance to pay losses while you cannot trade. You will need to have one or two of the most common BI extension clauses and cover will depend very much on the wording of that clause.

As the negative impact on the global economy from the coronavirus pandemic is revealed as far more damaging than initially anticipated by commentators at the beginning of the outbreak in China, businesses face important questions about how they can recover debts in these exceptional times.

Whilst most businesses are understandably husbanding every penny and looking to cut costs to survive the coronavirus crisis, you must be strategic about your survival tactics. If not, you may find that your actions mean that you have no business left after the crisis has abated.

Many businesses will have insurance to pay losses when their business is interrupted by an unforeseen event. This extends in some cases to illness and we set out below some areas for businesses to consider as they grapple with the current unprecedented challenge of coronavirus.

The outbreak of the Coronavirus has caused a serious and evolving health crisis which will continue to present significant challenges to our everyday lives.

There will undoubtedly be many directors who, increasingly concerned about the solvency of their businesses and their potential exposure to personal liability for trading whilst insolvent, may have been considering whether to shut down during this pandemic.

Charities, like everyone else, may find themselves struggling to adapt to the fast-moving situation created by Covid-19, however it’s incredibly important to ensure these organisations are in a position to provide their services and support in the current climate.

Ill-judged decisions under pressure are perhaps inevitable. Anyone giving advice about reputation management would hopefully have recommended Liverpool Football Club not to seek to furlough ordinary staff when its playing staff were still on full salaries.

As if we needed proof that bad news travels faster than good, we hear more and more reports of bad message management which is causing reputational harm to a number of organisations during the coronavirus crisis.

As the Coronavirus crisis forces businesses to adapt, reports are filtering through of a number making a series of easily avoidable mistakes either in pursuit of their bottom line; an effort to capitalise on a sales opportunity; or by simple carelessness.

In these unprecedented times chasing unpaid invoices can be a drain on already depleted resources for the average SME, but it is critical to their survival.