Back in 2004, Porter Capital Corporation (“Porter”), a US finance Company based in Birmingham, Alabama, financed a US corporation (“Corporation”) via an invoice finance facility. To secure the finance, they took guarantees from three guarantors, one of whom lived in London and was a co-owner of a valuable Knightsbridge apartment on Hyde Park in London and shares in a family company. The finance documentation was expressed to be under Connecticut law.
By 2008, things were going wrong for the Corporation and by March 2010 just prior to the Corporation’s Chapter 7 Bankruptcy in the US, Porter wrote making its demand for the account shortfall against the finance agreement’s three guarantors.
The High Court judgment, on Tuesday 15th September 2020, in the test case between the Financial Conduct Authority (FCA), on behalf of a number of policyholders, and various insurance companies over business interruption and COVID-19 has been hailed as a lifeline for SMEs.
Many SMEs will be very relieved at the result. The FCA estimated that 370,000 businesses could be affected by the test case; however not all will have been successful. Two out of 8 insurers successfully defended the claims against them.
It was sadly inevitable that the Covid pandemic would push the UK economy into a recession. Unfortunately, the money worries that result from a recession can and often do affect relationships, whether they be personal or business relations.
Even the strongest of relationships have been known to breakdown when finances are tight and the current situation may well have caused the most severe financial pressures that some business owners have ever experienced.
The moratorium on evictions for tenants who are behind on their rent has been extended until the end of 2020. The restriction was set to be lifted on 30th September 2020 but the secretary of state for housing, Robert Jenrick, announced an extension to give struggling retailers and other businesses a chance to “focus on rebuilding their business over the autumn and Christmas period”.
The June quarter day saw less than 20% rental payments made and with the next rent quarter day having just passed (29th September 2020) landlords will be bracing themselves for more of the same.
Landlords cannot at present evict their tenants due to rent arrears, as one of a number of Government measures introduced to ease the burden on businesses due to the Coronavirus. Tenants will have welcomed this measure; their landlords almost certainly less so.
It makes no difference if the rent arrears pre-date the pandemic.
There are parallel – though slightly different – restrictions on landlords of residential properties. In this article we focus primarily on commercial leases, where there is a prohibition on landlords taking any repossession action through the courts, currently until 30 September.
Reviewing and implementing your credit control procedures
COVID-19 and the resulting lockdown are having a huge impact on the cashflow of most businesses. 25% of UK businesses have temporarily closed down; 38% of businesses still in operation have reported substantially lower turnover; and 36% of firms have 3 months or less of cash reserves left.
Inevitably this pressure on businesses is set to continue but there is also an opportunity for SMEs to improve your cash position by good housekeeping. The Government is encouraging a culture of forbearance between businesses at present but this should not require you to take an excessively lenient approach to recovering debts that are rightfully due.
We shared this article in February 2017 and then this article in July 2017, which explained the current rules on recovery of costs by the winner of a court action from the loser. It had been proposed to introduce a “fixed recoverable costs” regime for business and other civil disputes, similar to the one for minor personal injury claims.
The Grenfell Tower fire in 2017 left 72 people dead, many injured and hundreds homeless and shone a spotlight on the construction of high-rise apartments. It was quickly concluded that the Aluminium Composite Material (ACM), that was used to clad the building, was the reason why the fire spread so rapidly and extensively.
In February 2017 we shared this article and in July 2017 we shared this article, which explained the current rules on recovery of costs by the winner of a court action from the loser. It had been proposed to introduce a “fixed recoverable costs” regime for business and other civil disputes, similar to the one for minor personal injury claims.
Our lives are moving more online and sadly this has resulted in a rise in financial scams. A recent poll of over 2000 individuals by YouGov and Lloyds Bank found 10% of them had been the victim of a financial scam. Property transactions are particularly vulnerable, with high values involved and often time is of the essence. There are numerous cases where solicitors and sellers have been duped into sending the sales proceeds to fraudsters, or buyers have paid the purchase money to someone who was not the real owner.
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Our lives are moving more online and sadly this has resulted in a rise in financial scams. A recent poll of over 2000 individuals by YouGov and Lloyds Bank found 10% of them had been the victim of a financial scam. Property transactions are particularly vulnerable, with high values involved and often time is of the essence. There are numerous cases where solicitors and sellers have been duped into sending the sales proceeds to fraudsters, or buyers have paid the purchase money to someone who was not the real owner.