What is available to stop creditors taking action against the company to recover debts during the current crisis?
The government has announced a number of measures to try to protect businesses during the current period of uncertainty. However there is no outright ban on creditors being able to take legal action to recover money they are owed, though there are temporary restrictions on some forms of legal action, like winding up petitions.
However, it is important to note that these measures only relate to winding up proceedings. Creditors will still be free to commence county court claims.
The new Corporate Insolvency and Governance Act 2020 brings in a new “moratorium” procedure. Businesses in financial difficulty that are viable and can be rescued will now be able to work with an insolvency practitioner to obtain at least 20 business days’ breathing space from creditors to allow the business to formulate a plan to deal with its financial problems.
For more information on the Corporate Insolvency and Governance Act, click here
As part of the raft of measures put forward by the government over recent months, there are also restrictions on landlords taking action to evict commercial tenants who miss rent payments. Various payment holidays and forbearance have been put in place in respect of certain tax liabilities and some business rates.
If your business is going to go into an insolvency process like administration or a company voluntary arrangement, there is the ability to obtain a freeze on creditors taking action whilst those procedures are put in place. However, these sorts of moratoriums will not be available to everyone and in any event not unless an insolvency process is being instigated.
Regardless of whether a business has formal protection from creditors or not, engagement with creditors and trying to reach agreement with them to deal with the debt is therefore vital. Much of the protection measures that the Government has introduced like curbing the ability of landlords to evict a commercial tenant, do not wipe out the debt. They simply prevent action being taken or a payment becoming due for a short time. All businesses should use that time to consider how those debts can be dealt with and engage with the relevant stakeholders sooner rather than later.
Related FAQs
Some commercial tenants have queried whether the current situation is a force majeure which may allow it to terminate the lease. Clauses which allow a party to terminate a lease for a force majeure event or, to put it another way, an “act of God”, are however extremely rare in modern commercial leases. Even if there is such a provision in your lease, it would need to be drafted to apply to an outbreak of disease.
With the loss of face-to-face meetings in the current situation, video conferencing has taken centre stage. But how do you do that in a compliant way? Here are some of the main high-level data protection issues to consider when selecting and implementing a new third party provider’s video conferencing system.
- Make sure you do your due diligence on the security measures offered by the provider. Clearly you can’t visit them, so look at the information offered publicly by the provider and read good quality, reliable, third party sources and ask the provider questions directly. Also ask any other organisations you know that use the provider. Document all this.
- If personal information is being sent outside of the UK/European Economic Area, make sure that transfer complies with GDPR. If it’s a US provider, is it registered in the EU-US Privacy Shield list or does it offer a model clause contract (you’re likely to need the 2010 version)? Or is the service provided from a country whose data protection laws offer equivalent protection to those in Europe? Look at the support service as well as the hosting. Document this.
- Make sure you put a compliant processor agreement in place. The provider should offer one as part of the contract terms. Check it meets GDPR requirements.
- You’re likely to need to update your privacy notice, particularly if you’re going to record calls. Provide participants with a short message and link to the privacy notice in the meeting invite and on any registration page.
- Create or update other GDPR-mandated documentation – for example, depending on your use, you may need a legitimate interests assessment and to update your record of processing.
- Finally, configure and use the system in a secure and compliant way. Look at the settings/options carefully and think through the security and compliance implications of each. That could include deciding who in the meeting can share their screen; whether or not you use passwords for participants; whether or not to record, and if you’re going to record, where to store the recording. Document your decisions and the reasons for them.
The ICO has said it understands that resources, whether they are finances or people, might be diverted away from usual compliance work during the pandemic. However the last thing you need at the moment is to create a bigger problem than the one you are trying to solve. So do the best you can, ask for help from one of our specialists if you need it, and keep the whole thing under review.
On 16 April 2020, Ian Hulme, the ICO’s Director of Assurance, posted a blog for business owners, employers and managers about how to safely roll out the latest video conferencing technology.
On 21 April 2020, the NCSC published security guidance for organisations on choosing, configuring and deploying video conferencing services.
Where a couple is not married, they have limited rights in relation to each other’s assets and these mainly relate to rights over property assets. There is complex Trust law which governs whether or not your partner could claim an interest in your property and it generally relates to where someone has invested in renovations on the property or promises have been made. If this is something you are concerned about, you and your partner could enter in to a Cohabitation Agreement. These Agreements can set out various matters, including who will pay the bills and where each of you would live if you separated. Most importantly, they can record your intentions about who owns the property and exclude any rights your partner would have against your property.
Commercial partner Damien Charlton explains the basic principles of force majeure, and how they are relevant in the current extreme circumstances caused by the Covid-19 pandemic.
Yes, but only for work purposes and where it is unreasonable to do so from home. Work colleagues cannot meet to socialise.