What support did the Chancellor announce for employers to be attracted to take on apprentices?

Borrowers will not have to pay a guarantee fee. Lenders will pay a fee to access the scheme. The Government will make a Business Interruption Payment to cover the first 12 months of interest payments and any lender-levied fees, allowing smaller businesses to benefit from no upfront cost.

British Business Bank has indicated that following earlier discussions with the banking industry, some lenders indicated that they would not charge arrangement fees or early repayment charges to SMEs borrowing under the scheme. Each business should check the terms of the loans being made to ensure this is the case and what the interest rate and prepayment fees will be following the period in which the Government makes payment of these amounts.  

Hosted by Advanced Manufacturing Forum, Partner, Matt Cormack discussed in this webinar how to avoid risks associated with your customer and supply chain contracts during this challenging Covid-19 period.

The webinar covers common questions such as:

• Can force majeure excuse me or my suppliers from paying on time?
• What are the risks to my business if I can’t perform on time due to Covid-19?
• What will happen to my contracts if the Government takes steps to require me to close down my facility?

To watch the full recording, please click here. (To note the recording begins at 10 minutes)

If you have any follow up questions, please do not hesitate to contact one of our lawyers detailed below or use our ‘ask us a question‘ feature.

In the event that the contractor is displaying one or more of the above signs, then it is worth considering the following actions to protect the employer’s position as far as possible:

• Closely monitor the financial and on-site performance of the contractor in order to assess the likelihood and timing of potential insolvency
• Ensure all bonds, guarantees and collateral warranties have been obtained under the building contract, and if not take steps to obtain them immediately
• Consider the terms of any guarantees to ensure that the guarantor’s obligations are not inadvertently discharged
• Bonds may require adjudication to have been commenced (or even completed) prior to insolvency so as not to be stayed pursuant to insolvency laws
• Carry out an audit of the on-site plant, equipment and materials, and evidence this (for example with photographs and written records)
• Ensure that copies of all relevant documentation have been obtained, for example drawings, specifications and anything required to comply with CDM requirements. If not, take steps to obtain these
• Review the payment position under the building contract, including whether any over payments have been made to the contractor which should be reclaimed, what retention is held or has been released, whether any payment notices may be necessary, and whether there are rights of set-off which should be exercised
• Check whether the involvement of any third party is required, for example funders, landlords, tenants or purchasers who may have rights in relation to the building contract and how it is administered
• Review the terms of the building contract relating to contractor insolvency – hopefully the parties will be fully aware of the building contract terms and have been administering it correctly to date, but if it has been hiding in a draw then now would be a good time to dust it off and ensure familiarity with the relevant provisions!

In general. there is often a stick or twist decision.  If the employer chooses to financially support the contractor (for example by agreeing different payment arrangements), this may help to keep the contractor solvent and more likely to complete the project, but it also exposes the employer to greater risk if the approach is not successful.  Conversely, withholding payments  from the contractor may make insolvency a self-fulfilling prophecy.  The precise advantages and disadvantages of the approach will be dependent on the specific circumstances of each case.

Companies House guidance on the impact of coronavirus on their services can be found at: https://www.gov.uk/guidance/coronavirus-guidance-for-companies-house-customers-employees-and-suppliers

This flexibility offered by Companies House could be a useful short-term help to businesses that are struggling to deal with the impact of the Covid-19 outbreak, but be sure to take action in advance of your filing deadline.

The outbreak is certainly going to have an impact on new lease negotiations.

Undoubtedly many transactions will be put on hold or indeed stop entirely. Where matters are ongoing, tenants may well look to strengthen rent suspension provision.

It is also possible that tenants and their representatives will also now seek to include termination rights for unseen events. In this regard, the concept of force majeure may start to appear more often in leases.

In both of the examples above, such attempts are not likely to be well received from landlords who will undoubtedly suggest that tenants ensure that their business interruption insurance policies are robust enough to protect the tenant in the event of any future pandemic events.

Another approach tenants might adopt going forwards in negotiations for a new lease (or indeed seeking to vary existing leases), is to move away from the traditional market rent model to a turnover rent arrangement. This will offer some protection going forward if trading conditions deteriorate, but again getting institutional landlords to agree such an approach may prove difficult.