Frequently Asked Questions around the COVID-19 Pandemic Situation

Covid-19 has had an impact on many aspects of business and the government are continually reviewing regulations to adapt to the changing landscape.

If you cannot file your accounts due to business interruption caused by the outbreak, you can apply for a 3 month extension. If you fail to do so and do not file your accounts, you will receive a penalty for late filing. Therefore, you should ensure that you speak with your accountant and apply for an extension as soon as possible.

For more information, please go to https://www.gov.uk/guidance/apply-for-more-time-to-file-your-companys-accounts

If you have any questions on you and your business following Covid-19, please don’t hesitate to contact our business services team who are on hand to assist.

The government have released a series of packages to support businesses including a Business Interruption Loan Scheme[link to loan scheme article], guaranteed by the British Bank. For more information please see: https://www.gov.uk/government/publications/guidance-to-employers-and-businesses-about-covid-19/covid-19-support-for-businesses

If you would like advice on any loans you propose to draw, please contact us as our business services team have experts happy to assist.

Our Business Service team are still ready, able and willing to assist. Our on-boarding process is entirely remote and we have adapted our procedures so that we can advise you via Skype, FaceTime or other communication method. We will do what we can to support you and ultimately keep everyone safe!

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Directors must act in the best interests of the company at all times. That being said, where a company is struggling financially and there are concerns surrounding insolvency, this duty to act in the best interests of the company becomes a duty that is owed to the company’s creditors.

Your conduct as a director can be brought in to question should the company find itself subject to insolvency proceedings. It is therefore imperative to understand the extent of those duties imposed on you personally in your capacity as a director.

This will depend on the wording of the clause in question. A force majeure clause may include a list of specific events that would permit termination. This could include “an act of government” and therefore cover a government imposed lock-down in respect of Covid 19. If the contract is silent on this, it will be a matter of interpretation and one to seek the advice of our specialist commercial contracts team.

A commercial Lease is essentially a contract between a Landlord and a Tenant.

Frustration is a legal term which allows the parties of a contract to be released from their future obligations. This applies if a ‘frustrating event’ has occurred after a contract was formed, which has made it impossible for the parties to carry out their obligations or if they have become radically different.

Unfortunately, this type of claim is unlikely to succeed. Whilst the principle of frustration is in theory applicable to leases, proving frustration is notoriously difficult, especially if the period of interruption is disproportionate to the outstanding term of the lease. The Courts have also held in the past that a contract will not be frustrated just because it is more difficult or expensive to perform.

Please instead check your Lease to see if you have a tenant break clause which can be exercised, or talk to your Landlord directly to see if they will agree to a surrender.

It is also worth checking if your Lease has a ‘force majeure clause’ which is explained in more details here, although these are uncommon in modern commercial leases.

If you require advice or guidance on ending your lease early please contact Jo Pusey, Associate Partner and Head of Commercial Property in Northampton on 01604 828282 or jo.pusey@franklins-sols.co.uk.

Generally no, as rent suspension clauses typically only come into play if the building has been damaged or destroyed by an insured (or possibly an uninsured) risk which in turn makes the building inaccessible for a period of up to three years. Nonetheless, you should check your Lease thoroughly to see if it contains any bespoke drafting to accommodate financial hardship or whether the standard wording has been varied in any way.

It is also worth noting that before the outbreak of Coronavirus, if you did not pay your rent on time a Landlord could commence forfeiture proceedings against you. There is currently an emergency piece of legislation passing through Parliament called the Coronavirus Bill. If this is passed and receives Royal Assent it will mean that you cannot be evicted from your property if you miss a rent payment date in the next three months. Consequently, as your Landlord is also likely to have outgoings, confronted with the prospect of possibly receiving no rent at all they will probably be more susceptible than normal to agreeing to either a temporary reduction in rent or a change to the rent payment dates. Most standard Leases are drafted so the rent is due on the usual quarter days, however you could ask if this could be pushed back to once yearly.

If you require assistance checking the terms of your Lease please contact Jo Pusey, Associate Partner and Head of Commercial Property in Northampton on 01604 828282 or jo.pusey@franklins-sols.co.uk.

If you are a Landlord who has incurred additional costs in maintaining the common areas of a building, say through excess cleaning then yes most standard commercial service charge clauses will allow you to pass this cost onto the Tenants. It is worth bearing in mind the burden of the rent alone on the Tenants may be unmanageable in this current climate, so you should look for cost savings around the provision of the services that you are obliged to perform under the Lease where at all possible.

As soon as any person begins to show symptoms of coronavirus, they should immediately self-isolate. If the person returns a positive diagnosis for coronavirus, you must contact Public Health England who will direct you as to the next steps you will need to take. Possible instructions include the closure of the premises, and depending on the extent of the potential exposure to coronavirus, the decontamination of the premises.