Will COP hearings still be open to the public?

The change in the law has the potential to place much greater financial risks on suppliers, making it more difficult to exit a contract with a customer of doubtful solvency.  This will place increased emphasis on appropriate financial due diligence and credit checking before entering into supply contracts.

In addition to the obvious issues around financial risk, suppliers will also need to think carefully about how their contracts are drafted.  For example, any form of right that is drafted so as to be triggered on customer insolvency will clearly be problematic.  These could include:

• Retention of Title provisions, which are commonly drafted so that the right to enter premises and retake possession of the goods is triggered on insolvency;
• Provisions for brand protection, which seek to control how goods are dealt with on termination of the contract.

This is potentially a very significant development for many businesses.  We would strongly recommend specialist advice be obtained so that:

• businesses understand the potential increased risks faced; and
• where possible, contracts are updated so that appropriate protections are maintained.

• Before any agreed reduction in wages, actual changes to earning patterns (loss of overtime, for example) may impact the pensionable salary as defined under the scheme rules, with knock-on effects to a number of benefit calculations, such as death in service benefits.
• Contractual changes to member salaries may adversely impact accrued benefits as the final salary figure may be reduced to a greater or lesser extent depending on the duration of furlough and the severity of any reductions in wage, and hence reductions may be difficult to agree with staff.
• Reducing employer contributions will be subject to a number of the same considerations applicable to a DC scheme listed above. There will also be a need to change the rules and interact with the trustees, although it may be possible to override the rules with a direct contractual agreement with members.
• Reducing employee contributions will also depend on the scheme rules, particularly as to whether there are any discretionary powers to suspend contributions, or pensionable service.
• The rules will need to be considered for any unexpected consequences of furlough: depending on the wording of the rules, furlough may or may not be considered a leave of absence and may or may not have the effect of terminating pensionable service. This could have far-reaching consequences.
• In particular, if the workforce’s pensionable service is inadvertently terminated as opposed to suspended in accordance with any relevant rule, this could trigger a statutory employer debt on an employer participating in a multi-employer scheme, if pensionable service continues for employees of other employers. This sort of issue is unlikely to be spotted until after the event, and therefore difficult to untangle. However, an employer should be able to take advantage of the “period of grace” provisions by notifying the trustees of its intention to re-admit employees to pensionable service within the next 12 months.
• Clearly the impact of the Coronavirus Job Retention Scheme on DB schemes is complex and legal advice should be sought before any changes are considered.

As their employer, you have an overriding duty to provide a safe system of work. The Trust would not be able to run a defence to say that an employee “waived their rights” and chose to continue to work. Provided the decision around restricting duties has been carefully thought out, a full risk assessment undertaken and the employee has been truly consulted about the impact on them, then the decision taken will be a reasonable management instruction. Failing to follow that reasonable management instruction could amount to a disciplinary offence.

A licence to occupy premises is not an interest land and operates as a commercial contract between the parties that enter into it. Licences tend to be put in place to cover short periods and consequently they are generally a lot more flexible than commercial leasing arrangements. To that extent occupants under licences should review the contract to establish whether or not there are any provision allowing them to terminate on notice to the Licensor.

Occupants under licences that are granted for longer periods without the option to terminate may try to argue that the contract has frustrated because they are effectively unable to occupy.

In part in response to the Covid-19 pandemic, legislation was passed by the government earlier this year which sought to assist companies to trade through the current economic climate. Included within the measures is a degree of protection from compulsory winding up.

The Corporate Insolvency and Governance Act 2020 (The Act), was laid before parliament on 20 May, and became law on 26 June. It is important creditors are aware of what changes have been implemented and the potential and impact which it may have upon debt recovery action you may be considering or have already commenced.

The main part of the Act affecting creditors is the temporary restriction on presentation of winding up petitions and the factors that the Court has to take into account when deciding whether to wind up a company.

On Thursday 24 September 2020 the government passed a further statutory instrument which extended the operation of these restrictions. As a result, the measures which were due to expire on Wednesday 30 September 2020 have now been extended until 31 December 2020.

A key point to note is that the Act has retrospective effect so any pending petitions presented after 27 April will be affected, along with any winding up orders made after that date.

The Act has introduced the following restrictions:

• A petition cannot be presented by a creditor during the period of 27 April 2020 and 31 December 2020 unless the creditor has reasonable grounds to believe that (a) coronavirus has not had a financial effect on the debtor, or (b) the debtor would have been unable to pay its debts even if coronavirus had not had a financial effect on the debtor;
• A petition cannot be presented after 27 April 2020 if it is based on a unsatisfied statutory demand served between 1 March 2020 until 31 December 2020;
• When deciding whether to make a winding up order the Court will need to be satisfied that the grounds giving rise to the petition would have arisen even if Covid-19 did not have a financial effect on the debtor;
• All winding up orders made between the 27 April and 31 December will automatically be void (that is, of no legal effect) unless the Court would have made the winding up order if the new law was in force at the time the order was made.