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COVID-19 has had a dramatic impact on business. The state of affairs unfolding in relation to COVID-19 is genuinely unprecedented and businesses that are otherwise sound and well run are facing difficulties. Sadly, there will be some failures despite unprecedented state intervention.

There are a range of factors, but challenges are likely to be presented by:

* The impact of policy decisions (for example, restrictions on public gatherings and sporting events)

* Reduced consumer appetite

* Supply chain disruption

Here, Howes Percival offers some guidance to businesses facing an uncertain future. Information is as up to date as possible at the time of going to press, but is meant for guidance only. Contact our team at Howes Percival for professional advice and information.


Supply Chain

by Matthew Thompson

THE widespread impact of COVID-19 on supply chains is impacting us all, both in the business world and at home. Whether it be the lack of shipments from Asia following China’s month-long lockdown, the temporary closure of UK workplaces to slow-down the spread of coronavirus through social distancing, or perhaps the lack of household essentials on the shelves of our local supermarkets, the disruption to our everyday supply chains is unprecedented.

A quick look at the stock markets shows that the business effects of this pandemic are truly global, unlike anything we have seen before, and it is inevitable that all businesses in the UK will therefore feel some knock-on effects to their supply chain. Whether it’s an inability to deliver goods to a customer on time, or a failure of a supplier to deliver required quantities to you, it is important that businesses look at their contracts now to ensure they are prepared if they need to look at terminating arrangements, or implementing variations to your existing supply contracts.

At this stage, it is worth trying to be prepared and plan ahead. You should now be talking to your suppliers and your customers if you have concerns about disruption to the supply chain. It might be that you can work out alternative terms in the current climate, or you may be able to find alternative suppliers – however, ensure that by doing so, you don’t breach any restrictions in your supply contracts if you have, for example, agreed exclusivity arrangements to source certain goods from certain suppliers.

It is inevitable that over the coming weeks and months, with the increased pressure from COVID-19 and the closing down of certain parts of the business world, we are likely to see an increase in administrations and/or liquidations of businesses. If one of those businesses is directly, or even indirectly, affecting your supply chain, our team of insolvency specialists are on hand to assist.


Cash is King

by Gerald Couldrake

IN early March both the US Federal Reserve and the Bank of England cut interest rates in response to the impact of COVID-19. This will help customers with variable rate borrowing. Nevertheless, with interest rates having remained historically low for over a decade (Bank of England base rate was last above 1% in 2009), central banks have little room for manoeuvre.

The European Central Bank has offered cheap loans to commercial banks to encourage lending to small businesses and has expanded its quantitative easing programme but did not cut rates.

While central banks and governments have taken steps to support businesses and will continue to do so, commercial banks will be key to the survival of some businesses.

It is encouraging that most have indicated that they will consider repayment holidays and other measures to support business customers. State-backed measures will increase the ability of commercial lenders to offer support to businesses.

For any business that is experiencing cash flow issues (or can see from projections that it is likely to), it is important to engage with lenders as soon as possible. The danger of leaving matters too late is that time runs out.


Contract Issues

by Miles Barnes

FOR many businesses, the current situation has made performance of contractual obligations difficult or even impossible. This is hitting businesses hard, with many struggling to keep afloat and looking at ways to minimise their exposure.

Many contracts contain express provisions for termination. If so, the starting position would be to check whether the termination rights are invoked.

If the contract is not for a fixed period and has no right of termination, it may be terminable on reasonable notice, and what’s reasonable will depend on the facts of the case.

Other key provisions could include force majeure – where, on the happening of certain events, may excuse a party from performing its obligations or allow for extensions of time or suspensions, variations or even termination of the contract; frustration, which ends a contract where an event occurs which renders performance of the contract impossible/illegal, or makes the obligations radically different from those agreed; price variation clauses which could, in times of economic downturn, provide an invaluable source of financial relief for businesses if the contract has them.


Key Workers

The government has published guidance on maintaining educational provision for key workers who are critical to the COVID-19 response and for their children who cannot be safely cared for at home.

Those classed as key workers are:


Health and Social Care

Includes but is not limited to doctors, nurses, midwives, paramedics, social workers, care workers, and other front line health and social care staff including volunteers.

Education and Childcare

Includes nursery and teaching staff, social workers and specialist education professionals.

Key Public Services

Includes those essential to the running of the justice system, religious staff, charities and workers delivering key front line services, those responsible for the management of the deceased, and journalists and broadcasters who are providing public service broadcasting.

Local and national government

Only includes those administrative occupations essential to the effective delivery of the COVID-19 response or delivering essential public services such as the payment of benefits, including in government agencies and arms length bodies.

Food and other necessary goods

Includes those involved in food production, processing, distribution, sale and delivery as well as those essential to the provision of other key goods (for example hygienic and veterinary medicines).

Public safety and national security

Includes police and support staff, Ministry of Defence civilians, contractor and armed forces personnel, fire and rescue service employees, National Crime Agency staff, those maintaining border security, prison and probation staff and other national security roles, including those overseas.


Includes those who will keep the air, water, road and rail passenger and freight transport modes operating, including those working on transport systems through which supply chains pass.

Utilities, communication and financial services

Includes staff needed for essential financial services provision (including but not limited to workers in banks, building societies and financial market infrastructure), the oil, gas, electricity and water sectors (including sewerage), information technology and data infrastructure sector and primary industry supplies to continue during the COVID-19 response, as well as key staff working in the civil nuclear, chemicals, telecommunications (including but not limited to network operations, field engineering, call centre staff, IT and data infrastructure, 999 and 111 critical services), postal services and delivery, payments providers and waste disposal sector.



IN such uncertain times, the only ‘known’ is that the impact of COVID-19 will not disappear overnight. The wide-reaching funding packages being announced by the Government will certainly help some businesses who are facing huge uphill challenges, but this won’t negate the need for you to review your existing arrangements.

The information here about legal matters is provided as a general guide only. Although we try to ensure that all of the information on our website is accurate and up to date, this cannot be guaranteed. The information should not be relied upon or construed as constituting legal advice and Howes Percival LLP disclaims liability in relation to its use. You should seek appropriate legal advice before taking or refraining from taking any action.

Contact Howes Percival on 01604 230400 or visit www.howespercival.com

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