SMEs and business owners
The coronavirus pandemic and the restrictions imposed to contain it, are having a significant impact on commercial dealings. Every business, large and small, is trying to understand both the immediate impact it will have and what the longer-term implications may be.
The extent of the fallout will differ from company to company and from one sector to another, but it is fair to say that everyone will be affected to some degree. One of the key issues our clients are facing is to what extent will this crisis impact on their and their suppliers’ contractual obligations. The question of whether coronavirus constitutes a force majeure is an important one for anyone with contractual obligations.
We are unfortunately hearing of companies who are in distress. This is a very difficult time for directors, many of whom have difficult decisions to make regarding their business and employees. Our corporate and commercial team are on hand to offer clear and practical advice to directors and help get the best possible outcome for you.
Although the news is dominated by the negative stories, the commercial world has not come to a complete standstill. Although some companies are struggling other are looking to grow and for some, this may a good time to look to buy a company or to accelerate their growth strategies. Again, our experts will be able to offer you bespoke solutions to help you meet your goals.
If businesses do suffer a drop off in activity, it may present a good opportunity to address some of the matters in the ‘housekeeping/to do list’ that get put off when business is flat out – the time to ‘do it later’ may be now. For example, this time could be a good opportunity to review outdated trading terms and conditions and customer/supplier contracts, internal employee and compliance manuals, corporate governance frameworks, updating privacy policies and GDPR processes, checking company books and considering your constitutional documents and whether a shareholders agreement should be put in place to govern the relationship between the current shareholders. It may also be a good time to review your banking arrangements, particularly in light of the current low interest rates, regular communication with your bank is invaluable at this time, and also look at alternative sources of funding.
Corporate Restructuring and Insolvency
Likewise, some directors and investors may feel this is a good time to restructure their businesses, having had some time to consider how they want it to look when they are through the other side of this difficult period. We can help you with this process and we work closely with third party suppliers to deliver this type of project.
If the worst does happen and the government relief is not available in time or sufficient to cover your business needs we can also offer pragmatic advice on the options open to you. Our insolvency team is working hard with other insolvency practitioners to find ways through this uncertainty that do not necessarily involve an insolvency process enabling you to mothball your business. There are new announcements being made by HM Government on a daily basis which is changing the traditional insolvency landscape and are designed to help directors save previously viable businesses.
The restrictions imposed to contain the pandemic are putting an unprecedented level of strain on the occupiers of commercial leasehold properties. This is being felt most acutely in the retail and leisure sectors where lockdown has forced many to cease business entirely and other to rush to find alternative and remote options such as take out or on-line sales. Leaseholders must check the detail of their lease as each one is different as are landlords. It is really important to seek legal advice before taking any actions to relieve the burden on you as it is not known how landlord or the courts will react to it.