Can we rely upon the ‘reasonable grounds’ point to proceed with a petition?
If the debts owed to you pre-date Covid-19 and your debtor seemed unable to pay well before the Covid-19 pandemic took place, it is entirely possible that you will be able to present a petition on the grounds that the debtor would have been unable to pay its debts even if the Covid-19 had no effect on its financial position. We do not yet have any reliable precedent as to how the Courts are likely to deal with such cases. Whether you are likely to succeed will depend on the exact circumstances of the debt and your debtor. There has been one case decided in August 2020 where the Court concluded that Covid-19 did not have a financial effect upon the debtor and that the circumstances which gave rise to the petition had arisen long before Covid and would have occurred in any event. A winding up order was made in that case. What we do know about the court’s approach is that the purpose of the Act is to allow viable companies to trade through the current times and the Court is likely to set the bar high.
Please contact us if there a debt you would like to discuss. Even if presenting a winding up petition is not available for now, there may still be other forms of legal proceedings that you can use to collect money owed to you, like county court proceedings.
Related FAQs
The government released further clarification on the Coronavirus Job Retention Scheme on 4 April. The wording referred to concerning public sector organisations and organisations receiving public funding remains the same.
The revised guidance does provide a helpful insight into how HMRC will deal with applications made to it for assistance under the scheme. It appears that there won’t be a particularly forensic approach adopted by HMRC. The guidance says you can furlough staff if you cannot maintain your current workforce because your operations have been severely affected by coronavirus.
It goes on to say that all employers are eligible to claim under the scheme and the government recognises different businesses/organisations will face different impacts from coronavirus. The need to demonstrate the impact of coronavirus on your business/organisation is not one of the criteria businesses/organisations are going to need to satisfy, so the government does not appear to intend to set a specific test to determine if a business/organisation is “severely impacted by coronavirus”. It is hoped that this should provide additional comfort to publicly funded organisations facing significant restrictions to their operations during the Covid-19 crisis.
A common feature of corporate acquisitions is that part of the consideration is paid on deferred terms or by way of earn out over a period of years following completion. Where deferred consideration is payable, this is either on the basis that outstanding payments will be made on scheduled dates or, less usually, subject to certain agreed (typically financial) objectives being met. These objectives almost always relate to a period before completion of the deal and are dealt with as part of a completion accounts mechanism.
Employees on any type of employment contract including full-time, part-time, agency, flexible or zero hours and foreign nationals who are eligible to work in the UK on any visa can be furloughed subject to the following excluded categories:
- Anyone who was not employed prior to 30 October 2020
- Anyone for whom you haven’t made a PAYE Real Time Information submission to HMRC between 20 March 2020 and 30 October 2020.
- Employees who are working but on reduced hours or for reduced pay
- Employees currently receiving SSP (see FAQ on SSP and self-isolation below)
- Public sector employees
- Employees of businesses or organisations in receipt of public funding for staff costs (except for those who are not primarily funded by the government and whose staff cannot be redeployed to assist with the Covid-19 response)
At 10am on the 21st July, we hosted the fourth of our “in conversation…” webinars, this time featuring the ninth largest private bank in the world, Swiss-based Julius Baer. Ward Hadaway partner Emma Digby once again lead the conversation, this time with Luke Downes and Darren Hirst from their investment and relationship teams on “Market outlooks – the before, during and after”. They were joined by Andrew Evans from our private client team to feed in his perspective. This will be of interest to individuals who are thinking about investment portfolios and pension pots, but also businesses keen to see how investors are viewing their sectors, markets and customers.
Luke and Darren took us through how the markets looked pre-Covid, how they responded to the pandemic, and obviously most importantly what we might expect going forwards. They took a look at the sectors that are seeing the quickest bounce-back, discuss which countries are likely to be the most attractive for investors, and where the long term financial gains are expected to be. They also touched on that imminent event, shrouded in mist recently but no less significant – Brexit! What is the expected effect on the markets, and who are likely to be the winners and the losers?
Failure to comply with the collective inform and consult obligations could impact on the fairness of any dismissals – see next question. In addition, a Tribunal can award a protective award of up to 90 days gross pay for each affected employee. The purpose is intended punish the employer for not complying with the obligations, not to compensate the employee for their individual financial loss.