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What are the key questions to ask ourselves as a business?

Some examples of the key questions to ask include:

  • Is there still a viable underlying business that is likely to continue beyond the current crisis?
  • What does the revised short to medium cash flow look like and will the company continue to be able to pay its liabilities?
  • Does the company have the support of all of its stakeholders – lenders, shareholders, customers, suppliers and banks – even though the business might be in breach of its own obligations?
  • What measures could (and should) the board put in place to protect creditors, including making sure that exposure to creditors (both collectively and individually) is not increased, assets are not sold at less than value and no creditor is treated more favourably than another?
  • Is there still a reasonable prospect of the business avoiding liquidation or administration?

The key question is always whether accepting the money is in the best interests of creditors as a whole bearing in mind that accepting Government support and continuing to trade might increase the company’s overall liabilities. Directors should be mindful that if the business fails, their decisions during this critical time may be scrutinised and it is therefore important that directors have up-to-date financial information and projections to form the basis of any decisions, take stock, get the right advice and document the decisions that are taken.

Related FAQs

Do you have to reach agreement during collective consultation?

Although an employer is obliged to conduct consultation “with a view to reaching an agreement”, it is not required to actually agree to any counter proposals made by the employee representatives. Merely to consider them in good faith.

What is the amendment to The Working Time legislation called?

The government introduced The Working Time (Coronavirus) (Amendment) Regulations 2020 to amend the Working Time Regulations 1998 to allow for the change.

VIDEO: Commercial law implications of the Corporate Insolvency and Governance Bill

Partners Damien Charlton and Jane Garvin look at the provisions of the Bill which impact on a supplier’s rights under a contract when their customer enters an insolvency procedure. They also outline other changes to insolvency procedures that the new law will introduce.

This webinar is part of a series designed for in-house lawyers.  If you would like to register to receive invitations to future events for in-house legal counsel, please email damien.charlton@wardhadaway.com.

Do you have to collectively consult for the minimum period of time before you can issue notice?

These periods are often mistakenly referred to as minimum lengths of consultation (especially by Trade Unions). That is not correct. Consultation can commence, conclude and notices of dismissal be issued within the 30 and 45 day periods. The expiry of the notice would just have to be outside of those restricted periods.

Can I ask my employees to stay away from home overnight during the national lockdown?

As above, employees must not leave their home unless they have a ‘reasonable excuse’.