The outbreak of the Coronavirus (COVID-19) is likely to have a significant impact on businesses. From disruption to supply chain, reduced demand, reduced cash flow, possible temporary closure of the business and managing employee issues, Murdochs is already assisting, and will continue to assist, our clients and other advisors navigate the range of issues this pandemic presents.
How we are helping clients and other advisors
From a workplace perspective, we are advising employers on their obligations to comply with awards and legislation, work health and safety issues, options to stand employees down or direct them to take annual leave, facilitating a work from home strategy, redundancies and general management strategies.
From a commercial perspective, we assist with reviewing your current insurance policies to identify what coverage entitlements you may have, managing any commercial disputes that may arise as a result of the impact of COVID-19 on your business, business continuity planning, negotiation of alternative payment terms, reviewing business structures, negotiations with banks and other financiers and implementing any necessary action.
In addition, the anticipated large scale disruption to business has the potential to cause solvency issues, particularly from a cash flow perspective. That is because the legal test in Australia for solvency is a cash flow test, not a balance sheet test; that is, can a business pay its debts as and when they fall due. As a result, there may be a significant increase in the risk of insolvent trading by businesses. Recent “safe harbour” legislation may assist company directors from incurring personal liability where debts are incurred while insolvent, however it is crucial that (among other things) proper advice is sought and appropriate records are kept by business owners.
Key takeaways
COVID-19 will cause significant disruption to most Australian businesses over the coming weeks, and potentially months. You need to develop an early, clear strategy and plan to manage the issues that may arise. If you would like more information about developing a strategy and plan, or to discuss any specific issues facing your business, please contact our Toowoomba Business Lawyers directly:
- for Business Law Assistance – Matt Bell on (07) 4616 9860
- for insolvency advice and debt recovery assistance – Craig Shepherd (07) 4616 9818
This publication has been carefully prepared, but it has been written in general terms and should be viewed as broad guidance only. It does not purport to be comprehensive or to render advice. No one should rely on the information contained in this publication without first obtaining professional advice relevant to their own specific situation.
