Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the hospitality sector where longer term challenges may be encountered due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer.
Irish companies are facing challenges with the sudden changes imposed on their businesses as a result of the impact of COVID-19. Some may be experiencing cash flow difficulties; others may have had to temporarily cease trading altogether.
Directors are responsible for managing their company’s affairs. This requires them to identify and navigate risks, and to ensure that appropriate strategies and where necessary contingencies are in place to anticipate and deal with such risks.
The BEIS press release does not give much more by way of detail. However the notes to the release state:-
- Talk to your contracting partners about any difficulties that have arisen or that you anticipate might arise. Everyone knows that unanticipated issues are going to get in the way of normal business. So address them head on. Pretending that they don't exist isn't going to be of any help to you or your business partners.
- If you are struggling financially take advantage of the government support. Our website provides guidance on how to access that support. Speak to your bank. The risk to banks is significantly mitigated by the government guarantee.
Midlothian Council v Raeburn Drilling and Geotechnical Limited & Others
One area of practice where clarity by the government will be essential is whether directors are going to be held to all the same standards during this crisis as they are in any other recession.
COVID-19 is an unexpected shock for many businesses. Some businesses are being significantly affected, particularly those in the travel and hospitality sectors. We consider some of the options open to otherwise good businesses facing cash-flow and other financial issues as a result of COVID-19.
How are governments dealing with COVID-19
We consider one case illustrating the efficiency of international insolvency proceedings commenced in Ireland, improvements to the efficiency of the appellate courts and one imminent legislative change, which will impose an administrative burden on the holders of security over book debts.
Ireland as an efficient venue for international insolvency
The Personal Insolvency Act 2012 was enacted with the aim of throwing a lifeline to debtors, many of whom may be in arrears on mortgage loans secured against their principal private residence.
“To achieve great things, two things are needed: a plan, and not quite enough time.” – Leonard Bernstein
To paraphrase, great things happen when there is a plan and a deadline.
Examinership is one of Ireland’s key rescue processes for insolvent companies. It has been used successfully in very many cases since its introduction almost 20 years ago.
Crucially, it encompasses a deadline with no flexibility.
100 days