DMH Stallard

So there we are, one director to another, discussing the woes of the world as at 18th September 2020 with a ‘second wave’ of COVID-19 gathering someway offshore. Jackie, an accountant and a good one at that and I are discussing what we, at board level, are advising our clients on how to keep the ship afloat, steering towards short-term survival and longerterm resilience and growth.



Don’t let anyone tell you different. If the cash, or access to it, stops, then so does the clock. Look at where your cash is going. Look at the situation bottom up. In other words, don’t look at current spend and budgets and look where to cut, but look at a blank sheet and figure out what you need.

We know there is a moratorium under the Coronavirus Act 2020 s82 on any forfeiture between March 26th and December 31st. Further we know that Practice Directions 51Z and 55.29 and 55C operate together to stop most proceedings for commercial repossessions until 28th March 2021. But County Court claims for non-payment of rent from guarantors can still happen. Nothing prevents a landlord from issuing a Claim for rent in the County Courts. Judgment debts attract interest under County Courts Act s69/ Senior Courts Act section 35A at 8%. The lease itself may provide for a default interest rate. So talk to the landlord and see if something can be agreed.

With the Furlough Scheme set to either come to an end or be modified, identify which staff are essential and seek to agree temporary pay reductions with them. If you cannot agree terms, then seek legal advice before you make redundancies. Getting a redundancy procedure wrong can be time consuming and expensive.

The Corporate Insolvency and Governance Act prevents suppliers from ceasing to supply companies entering into an insolvency process. The Act also suspends the wrongful trading provisions of the Insolvency Act (section 214 of which makes director’s potentially personally liable for wrongful trading). Most importantly perhaps is that from 27th April to 30th September this year, petitions for corporate insolvency are stayed. Even so, you need to work out what suppliers you actually need to ensure the running of the business and deal with them or pay them first. Whatever the law may say about interrupting supply contracts, the courts take time to deal with breaches. Identify your key suppliers, pay them or agree terms with them.

Access to cash and lending facilities is crucial. The old ‘bank manager’ is a thing of the past, at the moment banks are doing most things virtually. Currently, banks are enjoying stronger capitalisation than at almost anytime in the past. They have done what they can to encourage trends towards electronic banking. Take advantage of these facilities. Have cash flow projections and management plans to hand to deal with reduced income and outgoings. Be able to demonstrate that when you seek finance, and the bank comes to look under the corporate bonnet and kick the tyres, they can see that this is a business worth supporting and investing in.

‘May you live in interesting times’, was, so legend says, a curse used in ancient Imperial China, dating to the Q’in dynasty. Well, the times do not get much more interesting than those in which we find ourselves.


For those of us in the position of company directors, it was ‘react and adapt’ or go the way of the dinosaurs.
Jonathan Compton, Partner
LLB LLM MCIArb Solicitor Barrister

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