We are all aware that coronavirus (COVID-19) is having a devastating effect on most businesses. Governments internationally are all facing the same crisis and are being forced to take urgent and extraordinary action to help businesses in enduring this period of uncertainty.
Many businesses just do not have the cash-flow capacity to manage an emergency – and this is the danger that COVID-19 is posing to businesses across the country in a wide array of trades and sectors.
Bankruptcy Petitions adjourned to hearing dates in June 2020 onwards
The Royal Courts of Justice lately revealed that all winding-up and bankruptcy petitions presently scheduled for hearings will be adjourned to hearing dates in June 2020 and beyond.
The judiciary has said that it is not suitable for the general winding-up and bankruptcy list to be handled remotely.
Rishi Sunak, chancellor announced a financial support package two weeks ago offering respite to companies so that they can defer VAT payments and stop paying taxes on property leases.
There has also been a freeze on commercial property evictions for businesses that miss rent payments.
What are the practical implications?
Unfortunately, the world has seen numerous corporate failures linked to COVID-19 already, including:
- UK airline, Flybe
- US diabetes drug technology company, Valeritas Holdings Inc
- Chinese-owned oil company, Hontop Energy (Singapore) Pte Ltd
It may be highly likely that more business failures will occur as a result of covid-19, and the most vulnerable businesses are:
- Travel and tourism: airlines, travel companies, cruise line operators and hotels
- Manufacturers reliant on parts from badly affected countries
- Some Retailers
- Oil producers (oil prices lately dropped by more than a fifth and demand for fuel is expected to fall with COVID-19
Is your business affected due to the financial impact of coronavirus?
If you are going to be affected due to the financial impact of the coronavirus then your business insurance could possibly provide the cover you require if your business must stop trading indefinitely. You will need to check your policy wording to see if there is a clause about Business Interruption cover or Commercial insurance policy. If this applies, then see whether there is an extension for notifiable diseases.
Next, you may have the option to rescue your business by speaking to your bank and discussing emergency finance options. Look up the Coronavirus Business Interruption Lending Scheme which provides the lender with a government-backed 80% guarantee against the outstanding facility balance – so the finance should be achievable for all businesses.
You may also seek Governmental advice through their business support helplines. The helplines are intended to help small businesses with advice on how to minimise/cope with the impacts of coronavirus. The phone number are as follows:
England: 0300 456 3565
Scotland: 0300 303 0660
Wales: 0300 060 3000
Northern Ireland: 0800 181 4422
Contact JMR Solicitors if your business is affected amid the Coronavirus Financial crisis
If your business is experiencing short-term cash flow issues (for example, as the result of unresponsive demand from consumers), the Government has highlighted that one possible moderation strategy already exists in HMRC’s Time to Pay system. This is proposed on a case-by-case basis if a firm or individual contacts HMRC about falling behind on their tax.
JMR Solicitors will help businesses with corporate law issues that COVID-19 will likely throw up. The UK marketplace in various sectors has shown resilience when faced with uncertainty in the past. We believe, together we will be able to tackle the hurdles that mat come at us if we use legislation and support that is readily available to benefit businesses from bankruptcy and insolvency during the Covid-19 pandemic.
Contact our commercial law solicitors on 0161 491 3933 or email email@example.com