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Should we issue petitions?

Our advice to you here is simple. It will depend on the circumstances surrounding your debt but for the most part, unless it is crystal clear that there has been a debt outstanding long before Covid-19 and there was an inability to pay prior to the Covid situation we would recommend that you hold off issuing any further petitions until after the 31st December. Unless the criteria set out above is met, a judge is likely to exercise their discretion leniently and could dismiss the petition. This could also lead to cost consequences which would adversely affect you.

We are happy to discuss individual cases to assist creditors at this difficult time, however, generally any cases proceeding to petition would be the exception as opposed to the rule. 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

How the furlough scheme changed from 1 July – what is flexible furlough?

From 1 July 2020 the furlough scheme has been operating more flexibly.

The key changes from 1 July 2020 were:

  • All furloughed employees are subject to the new flexible furlough rules and the new basis for calculating claims
  • Furloughed employees can be brought back to work on a part-time basis for any amount of time and can work any work pattern
  • Employers can claim for the hours not worked compared the hours the person would normally have worked in that period
  • There must be a new written furlough agreement in place to record the agreement with the furloughed employee to return to work part-time
  • The new agreement (including a collective agreement) must be made before any period of flexible furlough begins but it may be varied at a later stage if necessary. The agreement must be incorporated into the employee’s contract of employment, either expressly or impliedly
  • Employers must keep a record of this agreement until at least 30 June 2025, and they must also keep a record of the hours the furlough employee worked and the hours that they were furloughed
  • Employees can be furloughed from 1 July 2020 for any amount of time and more than once
  • However, if you re-furloughed an employee after 10 June but before 1 July 2020, they had to be furloughed for an initial period of three consecutive weeks
  • Claims for payments under the scheme must not cross calendar months so if you are claiming for the initial three week period of a re-furloughed employee who was furloughed on 12 June for example, you must submit separate claims for the dates in June and July
  • Although flexible furlough agreements can last any length of time, you should only submit a claim to HMRC once a week.
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Will COP hearings still be open to the public?

Transparency is considered to be central to the philosophy of the COP. The guidance provides details on issues concerning transparency of proceedings and involvement/attendance of P. Whilst there will be some difficulties with ensuring that remote hearings are accessible to the public as an ‘open court’, provisions have been made for the continued presence of the press where the facilities can accommodate this.

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What records do I need to keep for Flexible Furlough?

You will need to keep a copy of the written agreement for a period of 5 years. If the hours of work change from that which you initially agree, you are likely to need something new in writing to cover each separate arrangement.

You should also keep records of how many hours your employees work and how many hours they are furloughed (i.e. not working). You must keep these records for 6 years, together with a record of the amount claimed, your claim reference number and your calculations.

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Other considerations – the mental health and wellbeing of BAME staff and others

Undeniably and understandably BAME staff, as well as those staff who are identified as being at a higher risk, are going to have high levels of stress and anxiety. For some, this may become of such severity that those staff should be considered to be disabled under the Equality Act 2010. The question as to whether someone is disabled is one that should be answered in conjunction with appropriate medical advice. But the question about how to support any staff suffering with stress and anxiety should not be left until that stage. Proactive steps need to be taken and expert advice obtained on what support measures should be put in place. We know that many NHS organisations are already giving the mental wellbeing of their staff the highest priority.

From our perspective, we would ask managers to be mindful that stress and anxiety is likely to feature in how an individual reacts to questions about the level of risk to their health and the impact on their duties. The conversations with some staff may not be easy to have and may be met with challenge.

For those staff who’s stress and anxiety is such that it would qualify as a disability, reasonable  adjustments will need to be considered to the processes that you are applying.

An additional point to consider – it might be worth writing to all staff, asking them to come forward if they have any health conditions that they think you ought to be aware of, assuring them that such information is being given in the strictest confidence. You want to make sure that you are taking the appropriate measures to ensure their health and safety.

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I have recently bought or sold a business. How will earn outs and deferred consideration be affected by coronavirus?

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.

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