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Planning for the future | ask the experts
Planning for the future | ask the experts
We understand that now, more than ever, business leaders are worried about what the economy will look like after the COVID-19 pandemic has passed. With experts predicting a recession worse than 2008, the business landscape will look very different to how it looks today.
Catch up on our live Q&A session, which gave access to a range of experts in employment law, property leases, commercial contracts, litigation and corporate matters. They were on hand to answer those critical questions you may have on how best to safeguard your business, plan for the future and what you need to start doing now.
We encourage you to put forward your future questions at comms@shma.co.uk.
Please do let us know of future topics that you are interested in, or for more information about our webinars please contact us and you can view past webinars at SHMA®ON DEMAND.
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Webinar transcript
(Please note this is auto-generated and un-edited)
0:07
Good afternoon, everybody. Welcome to today's webinar entitled preparing for the future ask the experts as will. Hopefully see on your slides in front of you. There's an opportunity for you to ask questions live.
0:22
All you need to do is if you look at the bottom of your screen, you should see an icon that says Q&A click on that and Type in to ask your questions with the aim is that we're going to try and answer the questions as we go along during the course of today. And if we run out of time then obviously will respond to them directly at the end. So just to introduce the panel that we've got with us today. First of all to introduce myself. My name is John Heuvel unemployment more partner at Shakespeare Martineau I deal with all the issues of employment contentious of non-contentious nanobot.
1:00
Discrimination as well and joining with me today. I have Justine ball legal director in our real estate litigation team that Justine specializes in property disputes telecoms termination and renewal of business. Lisa's helping clients obtain vacant possession. So on also joined by Emma Bryant partner in our corporate team Emma specializes in corporate finance MMA private Equity matters leading on conflicts corporate deals.
1:30
next we have Barry Jarvis partner and head of our dispute resolution team Arrow specializes in adjudication ADR alternative dispute resolution International arbitration helping to resolve major disputes for household names and last but not least Matt Sutton partner in our commercial team that specializes in commercial matters advising on supply products Services Agency distribution agreements Logistics contracts supply chain issues and And saying an IP rights. So without further Ado, I'll kick off. I'm going first question. I'm going to throw to you Mr. If I may what are we seeing in practice in relation to people accessing the government loan schemes?
2:16
But thanks Jon. Okay. We're as its brief reminder of the scheme's you've got the coronavirus business Interruption loan scheme and the coronavirus large business Interruption loan schemes, which these got the most attention early on. There's also a bank of England scheme for very large companies and then the bats that loan scheme for small businesses. So focusing very much on the see bills. It's fair to say they got off to a slow start as the bank's geared up to process the applications.
2:45
And we are now see money starting to flow though. And the latest figures are that over 5.5 billion pounds has now been loaned to SNES interesting. We've seen no new bank known you to bank lending under the scheme's generally the banks have been using schemes to support existing businesses rather than taking on new customers. And also it should be said that not all banks are taking part in the scheme.
3:12
So for practical purposes some businesses have been Left without access to this financial support on the other hand. The bounce-back loan scheme has been very active. It came late to the table. But it's the quickest and most accessible. We understand that almost 70,000 applications are processed on the first day of a scheme alone.
3:34
It is worth noting as well that in conjunction with the scheme's lenders have success. We put in place a wide range of additional measures to help smes and these include working capital over dark extensions and capital repayment holidays. So signs are positive that we are moving in the right direction now, but we'll see what happens over the next couple of weeks.
3:55
Thank you. You mentioned there that not all the banks are currently offering things.
4:01
Is it easy for businesses to know which banks are which banks aren't ya so for the businesses the list of accredited lenders on the British Business Bank website and that will set out for each of the types of loans which banks cook they can be used to reach so I can scheme Okay. Thank you. Matt question for you this time. My customer has declared a force majeure under our contract you to covid-19. Does this mean that he doesn't have to pay me? Well fundamentally, I guess that depends on the terms of the force majeure clause in the contract. So I think the first thing to look at these really does it apply to the customer at all.
4:46
Many cases force majeure Clause is only applied wires. I guess the second thing is let's assume that the force majeure Clause does apply to it to the customer. I think again what you have to remember is in most contracts that principle or indicate some cases.
5:02
The only obligation on the customer is to its to make payments and as the payment system system isn't suspended then then payment obligations of themselves won't necessarily be caught by a force majeure provision the fact that Max, if you as a supplier or able and willing to continue to supply goods and services the fact that a customer may not be able to utilize those goods and services because for example, he's Market is impeded in some way by the current pandemic again won't necessarily be an event of force Missouri will very much depend upon the wording of the closing question. And I guess the final thing to have in mind is to the extent that you've performed work or delivered Goods prior.
5:46
Err to the force majeure event being declared then again, your your your your your your entitlement to payment shouldn't be suspended ordinarily by a force majeure provision.
6:01
Thank you. And I think in fact you probably just answered another question which is come in and I was about to throw that to bury somebody lost a customer is refusing to pay for goods. We have supplied prior to lock down. What can we do Barry? I suspect the answer is as Max has just said that they're entitled to demand payment. Is that right?
6:26
It did it. Did it very much depends on whether we're talking about a force majeure situation here because if the question is is purely around a customer refusing to pay for goods prior to the lockdown that that might be slightly different. I think with fourth force majeure.
6:45
We've really got to look at the clause in the contract because as as Matt quite rightly says Force new juries is very much a contractual concept and Starting point the interesting point a space from the litigation perspective and what we're seeing is how the force majeure Clauses are are drafted.
7:08
So in particular, I think if there is specific wording in there than I think you are caught so specific wording along the lines of epidemic or pandemic then I think the the present situation is Is clearly covered there's there have been some arguments over whether the the intervention of the of the governmental stipulations by the government are slightly different but the the end result is if forced measure is triggered then and to just Echo what Matt says and the parties one or both of the parties have been relieved from their obligations and critically it means that no damages are payable.
7:59
Thank you. I'm right in thinking that in terms of the basic legal principles if there's no written force majeure Clause, there's no sort of default force majeure under English law or am I wrong? No, that's that's right. There is no implied. There is no implied sort of force majeure provision, I guess under English law and there is no implied sort of definition of force majeure. So you are sort of relying very much on what's in the contract.
8:27
I guess we have to be mindful of If there is no force majeure provision is that there is something under English law as we lawyers know called the doctrine of frustration which which enables a party to escape its contractual commitment where a contract has become impossible to perform. So so that might be available. I think what you have to have in mind is firstly that is a pretty high threshold to get to so impossibility or radically different set of contractual.
8:59
Locations to the ones you signed up to so the fact that it's for example, it'll be harder or more expensive to perform a contract won't get you to operation situation. The other thing to have in mind, of course is that frustration brings a the contracts to an end doesn't doesn't temporarily suspend a contract so that it can be brought back to life in the future patient will end the contract completely and both parties will walk away.
9:27
Thank you. I was about to leave fullest measure, but another questions come in and I think probably it's out to just deal with that whilst we're on this. The question is are consumers entitled to a refund where a contract Services cannot be performed due to covid.
9:46
So I think the answer is ultimately. Yes, they are sir. So, I guess the first Port of Call is is there's what do the applicable urgent condition say and I guess you know, they may have some Reaper refund Provisions in there from a consumers perspective though. I think the important point to just have it is that where those where whatever rights the consumer has under the terms and conditions for sure to be stab you right?
10:15
Then the teachers in a dedicated have those statutory rights though rights the consumer rights in this area are generally set out in the consumer rights act 2015 and the competition and markets Authority is has issued some specific guidance around covid-19 and make clear that, you know, a consumer isn't obliged to accept rescheduling or a voucher or credit note. He is entitled ultimately to a refund.
10:45
And copper Trader offering those options, but but the consumer isn't obliged to accept them and a Trader mustn't sort of unduly misrepresent the position or or pressure a customer into taking one of those options.
11:04
Thank you. And sorry yet. Another questions coming in on this topic. Whatever you this time Barry suppliers refusing to fulfill his obligations and deliver vital Goods to us citing false measure as the reason can they do this?
11:24
A supplier sites site enforcement sure, I guess you know it comes back to what we just said a moment ago. I think the first recourse is to is to the contract and seem precisely what that says. I think you have to go through all the requirements and see if the if the Clause essentially is there is valid it stands up.
11:50
There are lots of instances of this occurring at the Moments Matthew will will tell you exactly the same. I'm sure he's seeing an awful lot of this on the from the non-contentious side. We're starting to see more and more enquiries from litigation side, but it does it does inherently it does depend on the on the contraction position because this Matthew said a moment ago, there is no implied term in relations Force measure it all depends on what's there in black and white in the face.
12:26
Okay, thank you. Well, I think that's probably enough questions on force majeure for the moment. I'm going to turn to some of the other questions we've got coming in. I've got a question here in relation to Lisa's So Justin's is one for you. My business has been significantly affected as a result of having to close multiple premises. What should I do if I want to bring one home premises Lisa's to an end.
12:57
Okay, that's quite a wide-ranging question.
12:59
But very relevant at the moment, especially when we're seeing multiple closures of premises across the board on the High Street and otherwise, so I think the first thing you need to do if you do have multiple premises is do a review after Lisa's licenses and other documentation that govern those premises to see a when they contractually expire and be if there's any early termination Provisions in those leases so you can then think about which premises you can potentially get rid of on ones that you can keep. So when you're doing that assessment, the other thing you need to be looking at is if the contract expiry date is coming up you don't need to give any notice potentially you can just vacate so that would be an easy win on premises where you've got something coming up if you if the expiry date.
13:55
It was as recently passed and you're just occupying in inverted commas and paying rent in it as a commas and your lease is a what we call a 54 at least so you have security of tenure. You'll probably need to serve a three-month notice.
14:09
So, you know, you would have to continue obligations for another three months and those particular premises for those leases where you might have an early termination provision so you can serve what's called a break notice to terminate your lease before the end of the Expiry date there's three things you really need to look out for in those Clauses. You can pass releases to your advisors if you want a professional opinion as well, but I think you can do this reveal yourself in the first instance. The first three things that you should look at is a when is the brake date?
14:42
Is there a specific date you need to hit because then you need to calculate how many how much notice you need to give so if you have to give six months notice and there's a fixed day in the lease in which you need to terminate by you need to make sure Past that date yet, because if it has passed then you won't be able to terminate early but some of the leases you might see rolling break options. So you just serve three months or six months notice at any time to end anytime and they're a little bit more flexible. And then the last thing you need to look at is are there any conditions attached to those early termination Provisions? So do you have to pay all the rent up to the break day or do you have to give up vacant possession which in itself might be a bit of a challenge if you can't get into your premise?
15:25
Has at the moment to clear items and do some Works to bring it back to the state that it needs to be in. So there are various things you need to think about when you're doing a review to see how easy it is to terminate your press releases whether you can or not and and so that's the first step you need to take when thinking about what you should do with your leases. And as I said, if it's easier to pass that on to one of your advisors, you can discuss that together.
15:54
Thank you Emma this time question for you. All the m&a markets still operating. And if not, when will they come back?
16:07
The m&a markets of undoubtably slowed down in the last month or so, but they're not entirely stopped there. Obviously, unfortunately some business they're in distress. They're going through emergency processes, but we are also seeing a few normal Market transactions proceed as well. These are typically where a Target business has a strategic asset or in a specific sector such as Tech or potentially help Healthcare in the current circumstances.
16:36
Is and they deals are usually the first to slow down when we going into a recession, but they are also often first bounce back on the other side. We do know businesses that are have got cash on they've got the ability to move quickly and they are already currently planning for the future. So again, we're hopeful for the future.
17:01
Promising green shoots. Somebody's asked the question where does Barry work? I'm guessing that's due to the background on his video. Obviously. He's our man in the tropics that leads quite neatly onto another question, which is actually a question for myself says can I insist that employees take holiday whilst on furlough so that they don't have huge amounts to use up before the end of the year. Once they return to work.
17:29
This is an The question there was some government guidance issued earlier this week about using holiday and the overlap between holiday and furlough quite a quite a detailed piece of guidance, but actually has no force of law whatsoever. The reality is the legal position hasn't changed at all. The only point of clarification which is of value is that you can place an employee on furlough leave on leave whilst they're on.
18:00
Furlow and that will not break the period of furlough the current position is you have to have at least three weeks furlough but putting somebody on holiday during that period won't break that that continuity the the complicating factor is if somebody's going to be on holiday, you have to pay them their normal pay there's a little bit of uncertainty as to whether that is the normal pay during the photo period IV 80% or whether that is they're full.
18:30
Hi The View that most people take and I agree with is that it's probably full pay so would mean a top up to the pain of individual receives. If you want to put them on holiday one interesting question that's been arising recently is looking at whether or not hypothetically somebody can be on holiday during furlough because of the lockdown the argument being that the purpose of holiday.
19:00
Being health and safety driven benefit is for rest and relaxation. And can you really rest and relax when you're stuck at home with the kids? I'll leave that one for for another day as a question another question here Justine for you and similar to the to the previous one and it looks like it's from a tenant.
19:24
But this time it's in relation to their service charge the My landlord has kept open its shopping center as there are units that are sell food and pharmaceuticals which can remain open. However, my premises have been required to remain shut in accordance with Guidance.
19:41
The landlord is never the less demanding service charge for the March quarter, even though my premises have been closed do I have to pay Okay, that's another quite a general and a tough question because as I'm sure you'll appreciate it. All does depend on what's included in the service charge Provisions because they are all different and they all they range wildly across the market, but the I think the short answer is yes because you are contractually obliged to pay your service charge along with your rent Insurance rent and all of the songs that are due under the lease. So you are required.
20:20
A service charge but I do think that there is room for manoeuvre in terms of disputing the level of service charge that is being demanded. So a typical service charge provision may say you have to pay a fair and proportionate part of the of the of the service charge and if it is the case that a tenant has not been able to take the benefit of any of those Services because their premises have been shot.
20:50
Has of the government lockdown, I think there's a very good argument there for those tenants who have had their premises shuttered a sort of coronavirus to dispute the amount being claimed by the landlord.
21:02
It might not be a hundred percent, but it could be quite a large majority because the landlord will have things that are on contracts like some security some lighting things like that which may not you might not be able to get a hundred percent concession on however the argument is those It's that are taking the benefit of all of those Services whilst their premises are open should argue be pay a higher proportion because it's fair and reasonable to do. So, so I think it's absolutely worth engaging with your landlord now to have that discussion about the service charge not to say you won't pay any of it. But to say that the provisions of your lease if that is what it says is for you to pay a fair and reasonable proportion of your service charge that is not the case here because you have not been able to take the benefit of those.
21:50
Services, so it's absolutely worth worth a punt. Thank you, or do you think it's worth perhaps them talking to some of the other tenants who are also forced to be shocked to see whether sort of collectively they've got more clout. Is that an option? Do you think? Yes, absolutely and it may be that one of those tenants have already got in touch with their landlords and agreed something already.
22:14
And I know in the tenant Market tenants talk to each other and that should absolutely continue here in it and it may I'll assist you when you there after go and approach the landlord about your service charge as well.
22:28
Okay, thank you. Another question looks like for myself here. How do we deal with disciplinary proceedings during lockdown? Well part of the question depends on what the disciplinary offence is in principle. There's no reason why disciplinary proceedings can't continue in the normal way.
22:50
Obviously you can't have a physical meeting with the individuals have to hold that virtually but To side there's no reason why distribute proceedings can't continue pretty much in the normal way perhaps the more interesting conundrum is what happens if somebody is actually a furloughed worker it might be the individual whose subject to the disciplinary or it might be one of the witnesses the or indeed it might even be the person who would be the investigating officer or the hearing officer.
23:28
The position is that if you are furloughed you cannot provide any work to your employer. So I think it conducting a disciplinary hearing in terms of trying to be the chair or an investigating officer does amount to work. So that would be a no. No, you'd have to find somebody who isn't furloughed to conduct those particular roles, but responding to a disciplinary charge that's levied against you if you are furloughed would certainly not amount.
23:58
To work, I think most employers would be pretty concerned if their employees were using work time to prepare their own defense in terms of disciplinary allegation against them. So I think it's perfectly reasonable for the employee who is furloughed to still be the subject to disciplinary.
24:17
There is some a cast guidance has come out on this and interestingly their guidance suggests that you could only proceed with disciplinary if the visuals consent to doing so furloughed actually don't agree with that and certainly most of the commentary that I've seen the last few days suggest that that's come out of the blue. Nobody's quite sure why a cats have suggested that it's not consistent with the furlough scheme and the treasury Direction sets out further scheme. There's a practical issue which is that if the employee isn't physically in the workplace and is furloughed.
24:58
Obviously, you can't make them attend a video called meeting or whatever. So to that extent there's an element of consent involved but I think most employees would probably wish to attend if the risk was they're going to face a disciplinary sanction particularly if considered in their absence.
25:21
So let's have a look.
25:24
I've got another good now is probably don't want to be too similar to ones we had before so I won't answer that one Emma another question for you and how our business is finding opportunities in the current circumstances.
25:41
We always find that entrepreneurs will always innovate and the many examples of businesses finding opportunities in adversity with some businesses have been able to repurpose Supply operations. So we know of call centers now supporting the NHS manufacturers working on PPE number of companies have also adapted to focus on online platforms rather than face to face.
26:08
There are lots of other examples that direct approach in addition we touched on this in my last question as we see light at the end of the tunnel businesses with cash will be able to buy assets at reduced prices. So people are going to do best out of this or those with cash and the ability to move quickly.
26:29
We know of private equity and other investors who will be waiting for opportunities, but getting the timing right will be crucial now.
26:39
We as part of our group have been thinking about strategies for businesses who want to move quickly, but my advice that if you are a potential buyer, you should start making plans now.
26:54
Okay, thank you. Justine. Just this isn't a question that's come in but it's something that apparently is as I was just talking there.
27:06
Is there are you starting to see any movement in the commercial least market in terms of businesses looking to acquire a commercial property as they don't commercial lease businesses looking to start acquiring properties sensing that the market is at the bottom at the moment or And I think there's definitely a bit more movements movements starting to be seen. I think they're still quite a bit of uncertainty in terms of investment and available funds. So whilst we are seeing less transactions being progressed at a high speed. We are starting to see more from our clients that are saying yes, you know, we know this is going to progress.
27:50
We just have to understand where we're going where we think we're going to be A couple of months down the line both in terms of parties in the transaction and funding so whilst I think there is light at the end of the tunnel and we are starting to see things moving.
28:07
It's not quite at that pace that you know that we were potentially expecting but here's to hoping Absolutely. I'm conscious of time. We're coming up pretty much to the end. Now just one final question. If I may this one, I think I'll give it to Barry. I'm owed money for some Goods. What can I do in the present circumstances?
28:34
And okay the first thing I think to remember that whilst we're in very strange times at the moment the law essentially Remains the Same and generally speaking the exception of perhaps insolvency proceedings, which are will touch upon then the options available to you are more or less the same to the only difference is perhaps how the courts are currently working and how they have their applying remedies the I think it's fair to say I still feeling their way through the present pandemic and it depends on where you are in the country. Some courts are become much more Adept at virtual hearings hearings whether through Zoom like we're doing here or by by telephone, but I think what you've what you've also got to remember is the position of your customer here. What you don't want to do is necessarily.
29:34
Run off to run off to court spend huge amounts of money and then find that the customer is actually is actually gone under in the process, which is a very real possibility. That's not saying that you roll over and just write off the sums. You just need I think now more than ever to think more carefully before you launch into mitigation. It is worth mentioning here.
30:00
There is some government guidance that came out a week yesterday, I think The 7th of May which is which is pretty unprecedented and here it was about responsible contractual Behavior between parties and the government are all about about being collaborative and talking to your customers. And I think that that really is is good advice at the moment whilst the government position is not mandatory.
30:33
I think a good starting Cutting point is to talk to your customer find out if there's anything you can do find out what their their position is you of course, your contractual position is going to be vital as well because there may also be a retention type of clause in there which you could go in and look to recover the goods if that would be one option if they're essentially in the same state the insolvency proceedings.
31:00
I mentioned if you get absolutely nowhere on this And you decide you have to take action and solvency proceedings are pretty much off the radar with the moratorium that's been brought in. So then you'd be looking at letter of claim and going down the normal proceedings root proceedings are still happening claims are still being issued and Court proceedings are still being pursued. They just taking that little bit longer but the options are still there.
31:28
Okay, another in terms of rent arrears thinking of a similar situation. Justina is pretty much the principles the berries describe their the same or are there any other considerations to bear in mind?
31:42
Yes quite I think Barry's white right in terms of you know, you need to have a two-way dialogue tenants and landlords are like it's not one, you know, everyone has to share the pain in this and I think the government has a specially looked at tenants to try and alleviate some of their issues not being at not having the money of the income to pay rent. So there has been a number of measures that have been introduced by the government very recently. One of them is the moratorium on issuing stock demands.
32:11
And potentially winding up petitions when you get there, but also there's a stop on forfeiture for for rent. So you can't handle can't terminate Elise as a result of non-payment of the March quarter rent, but the most recent one that was recently introduced is usually landlords have the opportunity to utilize enforcement agents to go in and take control of goods. The law has recently changed.
32:35
So there must be 90 days of unpaid rent before a landlord can do that and the Stores any seven days worth of rent. So landlords can't now go in and go in and send it and enforcement agents to take control of goods if say the April rent is only outstanding all the March and April rent is outstanding. It has to be the full 90 days. So appreciates difficult for landlords at the current time. So again, if they're struggling with their tenants and not being able to get engagement, they're sort of options at the moment is the letter before action.
33:11
And the court brute or waiting the 90 days and then going down the the the enforcement agent route, but I think the key message here is it's not that rent. Another sums are being waived completely. It's just a deferment. So yes, it's painful at the moment for landlords in terms of trying to get payment but engagement is key and you know, yes there might there might not be any quick wins now but in the months to come that's when we're going to start.
33:41
Saying opportunities for landlords to recover what they haven't been able to obtain at the moment. I'm sick. Maybe at that point. There might be a little bit better engagement between all parties when all sort of recovery options are available.
33:59
Okay, thank you very much. Well, I think time is now very much against us. So apologies to those who've asked questions that we haven't been able to answer but will perhaps come back to you offline on that all arrays really for me to do is to thank everybody for joining us today. We hope you found it useful and relevant in the current circumstances.
34:23
If you do have any further information or have any specific queries that you'd like to discuss with us in more detail then of Just get in touch and we'll be very happy to help. We will also make a recording. This has been recorded today. So we'll make that recording available afterwards to you.
34:39
Finally just to mention that we have launched a free legal help line where you can book 20-minute phone or video call with one of our team of experts details are on the slide that that's now showing and so please do take advantage of that if you've got any questions, Thank you very much. Bye bye.
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