Despite what seemed like three months ago to be something only happening a very long way away, and would hopefully dissipate as quickly as it started, the Coronavirus pandemic has well and truly arrived on our shores.
Daily news reports are revealing the far-reaching effects of the outbreak, the likes of which have not been seen for generations. In what form, and to what extent, the health, financial and social implications will be in the aftermath of the pandemic remain an unknown quantity for us all.
We know the virus will pass, and our lives will eventually return to some form of normality, but there is no denying that these are challenging times for everyone and people are understandably harbouring a lot of anxiety and concern about their own circumstances and livelihoods (and those of their families).
Businesses of all kinds are trying to urgently assess what the road ahead looks like, and whether they have the means to survive. Many will be trying to understand whether the Government’s various financial initiatives, such as the introduction of loan schemes, VAT deferrals, and rates’ holidays for businesses operating in the retail, hospitality and leisure sectors (to name but a few examples) will be enough to help them pull through. The stark reality is that for some they will be, for some they might, but for others they simply won’t.
We understand that employers (and employees) are also trying to grapple with their respective options during these times, and whether the Government’s Job Retention Scheme serves as the short term magic wand needed to preserve as many jobs as possible. Similarly, we understand that suppliers and customers are urgently reviewing the terms of their business contracts, to see whether they are legally permitted to terminate, as opposed to the alternative of continuing to perform, contracts with parties who may find themselves without the means to pay for the goods or services provided.
We also know that prospective changes to insolvency laws in England and Wales are afoot, although as at the date of publishing this article, the details of what those changes are going to consist of (and how they’re going to operate in reality) are unknown. What we do know however is that the anticipated reforms are going to include:-
- A suspension of the law on wrongful trading under section 214 of the Insolvency Act 1986 from 1 March 2020 for an initial period of three months (although this will be extended if required);
- Giving businesses, which have legitimate reasons for needing it, a protective moratorium. This is intended to prevent creditors from taking or continuing enforcement action against the business, or steps to wind it up, whilst it explores rescue or restructuring options;
- Measures which prohibit suppliers of goods and services, which are needed by the business to continue trading, from terminating their contracts solely on the grounds of that business entering an insolvency process;
- The implementation of a new restructuring process, which provides an alternative option for financially-distressed companies to restructure their debts.
The legal landscape during these times is also constantly evolving, with Court hearings either being adjourned or held remotely and numerous (at least at this time) Covid-19 practice directions and Court protocols being issued and updated.
We know that there is so much change being experienced and large volumes of information being released which can be difficult to process and comprehend, but we are on hand to help businesses and individuals who are or who may be struggling in the coming weeks and months. We would invite anyone who has concerns or questions regarding their business, their responsibilities as directors, or their own personal financial situation, to contact any member of the Boyes Turner Business Support and Insolvency Team, who will be able to provide you with the advice and guidance you need during these unprecedented times.
Finally, we should add that both Phil Smith and Ollie Fitzpatrick are both on the Association of Business Recovery’s published list of Solicitors who are able to swear statutory declarations (in accordance with the Government’s social distancing guidance) so please contact either Phil or Ollie if you require their assistance in this regard.
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.