1 April 2020

Urgent Business Actions to Take During the Coronavirus (COVID-19) Pandemic

Andrew Lambros
Andrew Lambros Litigation Lawyer

With the current pandemic playing out, everyone realises that they need to take urgent action, but the question is what to start with and how to do it?  We have set out the issues and some of the legal points you need to consider to make sure your business is placed in the best position possible to get through this crisis and onto the other side successfully.

Costs reduction

Obviously, you need to work out what costs you can reduce quickly and how quickly you can do it.

Landlords and creditors

Communication and negotiation is key here.  This is the common advice and it’s correct.

What gets forgotten is the need to document any final agreement in a form that is legally enforceable.

Most businesses don’t realise that legally an agreement to accept less than what you’re owed is not binding. The creditor can sue you later for the shortfall.

You need to either ensure that there is some form of legal consideration between the parties to amend the contract or it needs to be documented in a Deed which is properly executed to make it legally enforceable.

Debtors

Securing cash flow is going to be vital, the reality is a lot of your clients or customers may not be able to pay you right now.

Our article on ways to try and deal with those issues can be found in the article linked below.

Employees

We have written previously about standing down employees and how, if done strategically, it can benefit your business from a cash flow perspective and allow your employees to ‘stay on the books’ while accessing Government funded entitlements like the new JobKeeper package.  Those articles can be found below:

Consider your contractual obligations

If you have commitments to your clients or customers such as building contracts, supply contracts or other services you need to work out if you will be able to meet those obligations.

A lot of contracts contain financial cost provisions if they are not completed on time.  Even without specific financial costs, as a matter of law you can still be liable for not completing your obligations under a contract.

These contracts should be reviewed and if you think there could be a problem, you should be looking to negotiate and amend these contracts now, in the event you can’t complete your contract.

Remember you may be affected by one of your suppliers or contractors being unable to complete their contract to you and this should be factored into any such negotiation.

For a more detailed article on this issue please click below:

Government assistance

Obviously, everyone will be looking at these packages, you need to factor in how long payment will be for some of these programs and how long any approval for government loans might take and how quickly you need to apply.

For a more detailed article on this issue please click below:

Be realistic about your business

If your business was already struggling or you expect that it will take a long time to recover, then you need to consider your options of closing down your business.

Many from the ATO, creditors and the landlords are talking about deferring these debts, not forgiving them.

Should this current situation continue for the next 6 months then the amount of debt that your business accrues may become impossible to repay long after this crisis is over.

Trying to struggle through for several more years without being able to repay these debts means you might still end up closing the business down but will have lost the opportunity to spend those years building a new business or receiving paid employment.

If you are in this category please contact us, there is a lot that can be done to avoid this or reduce the impact of closing a business but only if you act quickly and don’t wait until the last minute.

Legal assistance

If you need any advice or assistance in carrying out these steps please get in contact with us.

Please click here to access our Coronavirus (COVID-19) Resource Centre to access all of our latest articles and updates and meet our expert response team who can assist you with any challenges your business may face.

 

 


Individual liability limited by a scheme approved under professional standards legislation (personal injury work exempted).

 

 

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