Spencer Laymond, Partner of Curwens LLP, offers some advice to directors, business owners and entrepreneurs involved in issues affecting businesses, as a result of the sudden and significant impact of the Coronavirus pandemic.
“Business is founded on principles of clarity and certainty. Coronavirus covid-19 has created confusion and uncertainty on an unprecedented scale. I wanted to provide some answers to common questions, and also make available some practical know-how. If there are any other specific questions you have then please let me know. Questions on contracts tend to fall into three categories: review and report, fix or prepare. However, behind the contract I understand there is a story and a situation. The Curwens tagline is ‘your legal team for life’ and the Curwens business team will provide our full support with your business situations going forwards”.
Directors have always been subject to various duties, for example to promote the success of the company for the benefit of the members (shareholders) as a whole. Coronavirus may force thousands of company directors to reconsider their duties to now act in the best interests of creditors. But when should a director make a decision that a company is genuinely no longer viable, and avoid becoming responsible for wrongful trading?
The coronavirus is forcing business owners and entrepreneurs to make changes to their business, sometimes with significant consequences, and at the heart lies a contract. A successful business owner needs numerous skills, and more than ever, understanding some esoteric legal concepts is fast becoming one of them. A key question is now how the coronavirus pandemic and government response impacts business contracts.
With government lockdowns, social distancing and #coronavirus chaos, even the basic menial freedoms we take for granted, such a stroll in the park, can be a challenge. But with coronavirus, signing an agreement can present a host of logistical problems. What if you are working from home? What if you are self-isolating? What if you need multiple parties to sign an agreement? What if you need someone to witness your signature? How can you safely apply a signature and avoid cybercrime? What does English law have to say on the subject? What if you are dealing with a person overseas?
Is the answer to all of these questions an electronic signature? Read more about coronavirus and signing documents.
If you are an owner manager of a business with financial difficulties, it can be difficult to know which way to turn. However, there are a number of options for when a company or LLP is unable to pay its debts as and when they fall due, from a formal insolvency process to a restructuring of the business.
Read more about restructuring and insolvency processes here.
Coronovirus may force successful business owners to close their businesses by liquidation as a means of walking away from mounting debt that cannot be repaid. However, if they are able to carry on some or all of the business afresh within a new company, under the “Phoenix Rule” they can find themselves in significant trouble as directors or shadow directors if, within 5 years of the liquidation, they use the same or similar business name.
In this article, we examine the “Phoenix Rule” and its three exceptions.