Even if the Government pays the wages of my employees who are not working, there is still not enough money to pay the bills. What should I do?
Click here for details of what sort of things directors should consider if the business is insolvent .
There may be additional sources of funding available in addition to the funding made available to help pay the wages.
If you still have concerns that your business might not be able to survive you should take advice as soon as possible from our team of experts or an insolvency or restructuring practitioner. That doesn’t necessarily mean that the business is bound to fail but your advisers will be able to explore with you different ways to navigate through the current difficulties faced by the business and any restructuring/refinancing opportunities based on their extensive experience of helping companies that are facing financial problems. If ultimately saving the business in its current form is not possible, your advisors can help you ensure that you do everything you can to protect your employees and creditors whilst also ensuring that you comply with your duties as a director.
Related FAQs
Payments of the Community Infrastructure Levy (“CIL”) are tied to commencement of development, and where an instalment policy is in place, the instalments are usually tied to periods of time following commencement rather than build out rates. Therefore where a development has commenced, payments of CIL are likely to fall due in respect of a site notwithstanding that the site may have temporarily closed or build out rates have slowed.
New regulations now in force, provide some additional relief for those developers with an annual turnover of £45 million or less. Such relief will allow the Council to defer payments, disapply late interest charges, and refund late interest charges that have already been levied since 21 March 2020.
For those developers that cannot benefit from the new provisions, unless a Council has adopted an exceptional circumstances relief policy the regulations do not provide for any relief to be provided in instances where payment of CIL will create viability issues. Most Councils have not adopted such a policy, and in those circumstances the CIL liability will remain due in accordance with the payment schedule on the demand notice.
Councils are at liberty to amend their instalment policies in accordance with their own internal procedures, and the Government is encouraging Councils to explore this option to provide some relief to developers. However this will only assist in respect of any prospective instalments where the development commences after the new instalment policy has been adopted.
For those developers whose annual turnover exceeds £45 million, the Government seems to be taking the view that such developers can afford their CIL liabilities regardless of the current climate. The only concession the Government has proposed is to encourage Councils to make use of the existing discretion they have in respect of the imposition of surcharges for late payments.
Sponsors should update the proposed start date by adding a sponsor note to the CoS via the Sponsor Management System.
Does a sponsor need to report a change in workplace if a Tier 2 visa holder is working from home as a result of Covid-19?
The Government acknowledges that there may need to be some flexibility to enable developers to meet any existing s106 obligations, in particular financial contributions, during the current health crisis and in recent guidance it encourages Councils “to consider whether it would be appropriate to allow the developer to defer delivery”. However, the Government considers that the existing arrangements for varying a section 106 agreement by way of a deed are sufficient and will not be legislating for any additional temporary mechanisms.
In the absence of any formal variation, the Government does however advise Councils to take a “pragmatic and proportionate approach” to enforcement of planning obligations at the current time.
The Government’s advice does not refer to concerns over the quantum of any planning obligations but is concerned only with the timing for delivery. However, the viability behind many sites is likely to change as a result of temporary site closures, or the availability of construction materials and labour once sites can re-open. Where there is already a s106 agreement in place, a developer may wish to renegotiate their position on the basis that certain planning obligations are no longer affordable.
Where a s106 agreement was entered into longer than 5 years ago, an application can be made to the Council to formally vary a planning obligation that is now “without purpose”. Any refusals can be appealed to the Secretary of State.
Where a s106 agreement was entered into within the last 5 years, the agreement can only be modified with the agreement of the Council. The ability to renegotiate a s106 agreement will therefore come down to the willingness of the Council to accept the revised viability position. Where Councils are willing to consider this, a robust viability assessment agreed with the Council is likely to be needed.
Another obvious cost cutting measure is to reduce working hours, either temporarily or permanently. Again, it should be done fairly, either across the board or by selecting teams/individuals based on objective business reasons. Imposing without agreement would create significant risk, therefore would require fair selection and consultation.
Despite remote hearings being the default position at present, formal permission will still be required by the court and a template order was circulated with the guidance. This template sets out the relevant directions and recitals to include in your order. An application to the COP for a remote hearing will not be required.