What routes of challenge are available to an insurer’s rejection of my business interruption claim?

On Tuesday 23rd June, partner Emma Digby was in conversation with Steve Hamstead and Mark Smith from AON along with Ward Hadaway commercial lawyer Nathan Bilton in a webinar titled Can trade credit insurance help to keep the supply chain moving?

The insurance market is under untold pressure as a result of the pandemic, and in such times there is a risk that insurers will cancel or reduce credit lines, particularly in certain high risk sectors such as retail. However the Government has stepped in to effectively underwrite the existing trade credit insurance agreements, and to keep trade supplies moving. Will this be enough?

In this webinar, we discussed:

• the Government backed scheme and how it will operate
• the prospects of obtaining insurance going forward, and whether it will become too cost prohibitive
• could the new legislation put your business at risk and jeopardise your insurance cover if you cannot cancel a contract when you are not getting paid for your goods or services
• the Brexit effect, and how this will affect the insurance market
• protecting your business with proper risk assessment processes and paperwork

• On admission to hospital, all adults should be assessed for frailty, irrespective of their age and Covid-19 status. Regard should be had to any comorbidities and underlying health conditions.
• If a patient is identified as potentially having Covid-19, the UK Government guidance on infection prevention and control measures should be followed.
• If Covid-19 is then diagnosed in someone who is not isolated from admission or presentation, the UK Government guidance on actions required when a case was not diagnosed on admission should be followed.

The definition of a relevant establishment is a question of fact for an Employment Tribunal. Guidance from case law says that ‘establishment’ should be interpreted very broadly (so as to avoid employers escaping the need to collectively consult), and may consist of:

• A distinct entity
• With a certain degree of permanence and stability
• Which is assigned to perform one or more tasks
• Which has a workforce, technical means and a certain organisational structure to allow it to do so

However, there is no need for it to have the following:

• Legal, economic, financial, administrative or technological autonomy
• A management which can independently effect collective redundancies
• Geographical separation from the other units and facilities of the undertaking

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.

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.