Which products and services are affected?

The formal Government position relating to construction sites is that construction work should continue on site if it can be conducted safely, and the Business Secretary, Alok Sharma, has written an open letter to the UK Construction Industry thanking it for all its help in the current crisis. The letter also confirms the Government’s current official policy of keeping construction sites open. The full text of the letter can be downloaded.

This also remains the formal position of the Construction Leadership Council (CLC) with the qualification that sites should operate in accordance with Public Health England instructions; without compromising health and safety; and in accordance with the Site Operating Procedures issued last week by the CLC.

In practice, many construction sites have been closed by national developers and house builders due to difficulties with staffing and supply chain, and practical issues with compliance with the social distancing and site operating procedures.

The Scottish Government has recently issued guidance that all non-essential construction sites, which includes housing, office, leisure, schools and retail sites, must close to reduce the risk of the spread of Covid-19.

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.

Ultimately closing a service will be a decision that is taken at the highest level and that decision will depend on risk appetite.  Often these types of higher risk are mitigated by way of insurance but that still depends on an insurer being willing to accept that risk. This decision will depend on accepting a known risk and its consequences.

All policies will impose a stringent obligation, often with time limits, for you to notify insurers of circumstances that may give rise to a potential claim under the policy and non-compliance may well negate your cover. If therefore you have potential cover under your policy you must make a precautionary notification to Insurers as soon as possible.

The BBC

The national broadcaster’s collated content surrounding the Covid-19 pandemic:
https://www.bbc.co.uk/news/coronavirus

and with regards to business:
https://www.bbc.co.uk/news/business