Covid-19: The Future Fund for Financing of Innovative UK Companies

By Sam Pearse

21.05.2020

On 20 April the United Kingdom’s Chancellor of the Exchequer announced that the UK Government would launch the Future Fund as part of the British Business Bank Coronavirus Business Interruption Loan Scheme. The Future Fund is intended to provide support to the UK’s innovative companies with good potential, for which we might read start-ups, growth companies or emerging companies. The Future Fund was launched on 20 May. This alert summarises the scheme, eligibility and the application process.

What financing is available?

Continue reading “Covid-19: The Future Fund for Financing of Innovative UK Companies”

COVID-19: Insolvency & The UK Gov’s Temporary Suspension of Wrongful Trading Liability

By Linda Crow

19.05.2020

Wrongful Trading

On 14 May 2020, the UK Government extended the temporary suspension of wrongful trading liability until 30 June 2020.

On 28 March this year, the Government announced that it would “at the earliest opportunity“ introduce legislation, retrospective to 1 March 2020, to relax the insolvency rules which can make directors of limited liability companies potentially liable if they continue to trade and incur liabilities when they knew or ought to have concluded that there was no reasonable prospect of avoiding an insolvent liquidation or administration.

The relaxation of the wrongful trading rules is to give directors confidence to do all that they can to continue trading during the pandemic emergency, knowing that they have no threat of personal liability should the company subsequently fall into an insolvency procedure.

The current laws relating to fraudulent trading and directors’ disqualification continue in full force and effect. Continue reading “COVID-19: Insolvency & The UK Gov’s Temporary Suspension of Wrongful Trading Liability”

New Guidance Documents on Green Loan Principles and Sustainability Linked Loan Principles for a Post-COVID-19 World

Many hope to see an expansion in areas that stimulate growth in a more environmentally friendly manner

By Drew D. Salvest & Natalie A. Stewart

19.05.2020

While the world is currently focused on the impact of COVID-19 on the global economy, with “COVID-19 Bond” issuance easily outdistancing the current volume of green financing, it is time to consider post-COVID-19 activities. One positive effect of the pandemic is the demonstrable improvement of carbon levels and other environmental measures. So, as national governments consider measures to reopen their economies, lenders and borrowers may want to consider how best to finance the economies’ reemergence. Many hope to see an expansion in areas that stimulate growth in a more environmentally friendly manner.

In this context, loan market groups including the Asia Pacific Loan Market Association (APLMA), Loan Market Association (LMA) and Loan Syndications and Trading Association (LSTA) have recently published guidance to market participants on how to apply the Green Loan Principles (GLP) and Sustainability Linked Loan Principles (SLLP) in practice. The aim of the guidance is to develop the market for green financing, following the publishing of the GLP in March 2018 and the SLLP in March 2019.

The key difference between green loans and sustainability linked loans is that green loans place greater significance on the use of proceeds for green projects, whereas sustainability linked loans look to the sustainable nature of the borrower measured against specific targets. Loans can follow both the GLP and SLLP, but are rarely seen in the current market.

Further guidance has been given on the following aspects: Continue reading “New Guidance Documents on Green Loan Principles and Sustainability Linked Loan Principles for a Post-COVID-19 World”

COVID-19: UKGov Holiday Pay and Entitlement Guidance

By Nic Hart

13.05.2020

This UKGov guidance outlines how holiday entitlement and pay operate during the coronavirus pandemic. It is designed to help employers understand their legal obligations, in terms of workers who:

  • continue to work
  • have been placed on furlough as part of the government’s Coronavirus Job Retention Scheme (CJRS)

This guidance should not be treated as legal advice. Employers and workers should always check individual contracts and if necessary seek independent legal advice.

Holiday entitlement

Almost all workers, including zero-hour contracted workers and those on irregular hours contracts, are legally entitled to 5.6 weeks’ paid holiday per year. The exception is those who are genuinely self-employed. Continue reading “COVID-19: UKGov Holiday Pay and Entitlement Guidance”

Staying ‘COVID-19 Secure’: Analysing UKGov’s Back-To-Work Guidance

By Nic Hart

Following on from the Prime Ministers statement on Sunday evening (May 10th), setting out the next phase -Stay Alert- there was a general reaction of uncertainty about how this will translate for employers and employees in practical terms.

In the time since the Prime Ministers statement we have now had a number of Guidance documents released regarding how workers will be kept safe, which is fundamental to implementing a return to work which will have industry and union support. I have given an overview of the new Guidelines and Guidance below, however I am aware that there will be sector specific queries as this Guidance is implemented which I am happy to discuss as required.

The first of the guidance was the Government paper- OUR PLAN TO REBUILD: The UK Government’s COVID-19 recovery strategy, published yesterday -May 11th, which dealt with the work place in general terms. This advised that from Wednesday May 13th and for the “foreseeable future”; Continue reading “Staying ‘COVID-19 Secure’: Analysing UKGov’s Back-To-Work Guidance”

Lean Isn’t For Lockdown, It’s For Life

Remote working has put distance between lawyers and clients, but it has also reconnected them

By Alex Geisler

05.05.2020

We didn’t have much time before the Coronavirus lockdown to wonder what it’d be like. If we’d had more time to think about it, maybe we’d have been fearful. What would social distancing mean in a work context? Businesses would have new and urgent problems, but how would stakeholders engage, collaborate and solve them? How would external lawyers support businesses with these new and urgent needs? Even if we could travel to clients’ offices, there’d be no-one there. Would lawyers become disconnected from businesses?

This would be one way of looking at it. But a better way would have been to view it as an opportunity, and anyone who did so would’ve been proved right. If the lockdown has taught us anything, it’s that people will always adapt. As with anything in life, if you can’t change your situation, you have to adapt your personal response to it. In this case, the adaptation was a shift towards leaner working methods, and lawyers have played their part.

For me, this confirms my long-standing belief that ‘lean lawyers’ exist everywhere. These are folks with lean instincts and matching work methods. I know a great number of lean lawyers here at Duane Morris, and I see examples of lean practice in all corners of business. Whether these people call their methods ‘lean’ matters not. They might use words like client-oriented, solution providers, effective, efficient or even nimble. Or they might just call it knowing the businesses they serve and giving good client service. Regardless, these are all synonyms for lean practice.

Then came the lockdown, and the community of lean practitioners grew significantly. This was commendable and inevitable. Businesses have existential problems and need quick actionable advice. Suddenly, of necessity, businesses and their lawyers have had to find leaner methods to deal with almost every daily task.

Let’s put this in a context. Suppose a routine project produces an unexpected hiccup. Pre-lockdown, this might have justified internal stakeholders and external advisers all jumping on planes, trains and automobiles, to have in- person meetings. As we discuss in Lean Adviser[1], these events can be well planned and executed, or they can be wildly inefficient and ineffective. Now suppose the same issue arises during lockdown. The solution won’t be a road trip next week, it’ll be a virtual meeting today. Special consideration will have to be given to meeting goals, sequencing and structure, as well as to what materials to pre-circulate and how to capture output. The lockdown lean effect isn’t just the elimination of travelling time, now the participants have to think about refining almost every task for remote working.

Pre-lockdown, a multi-party, in-person meeting was an accepted norm. Participants had the luxury of creating beautifully crafted work product to present. They’d throw a bunch of papers into document bags and onto laptops, and get on the road. The meeting would often be long, and attendees might grandstand, improvise, or even fade. Often the participants would go their separate ways to reflect on the issues, and maybe send follow up reports. Decisions got deferred. In that setting, it’d be a challenge just to track the issues, navigate the papers and access the key data. How many meetings have you seen come to a standstill when somebody says “you know what, why don’t we all go ahead and take a break, get some fresh coffee while Kevin looks in the document bags or Sally makes some calls, to see if we have that report?”.  Sound familiar? Try doing this in a remote working setting and it starts to look very clunky.

Virtual meetings are different, they’re shorter but need more and different preparation. They demand good structure, key materials, clear agendas and well-defined goals. This extra time spent in preparation delivers shorter and more productive meetings. Attendees have a shared focus, key issues are isolated and decisions are taken. As with meetings, so with reports. More prep time, but a better product. Sure, it can be more difficult to produce a short report, but it works way better than the superficially impressive long form. Not only do people actually read it, but they alight on key points without having to find them buried in the text.

In all these ways, the business of doing business has changed. New methods have been found, and business people and lawyers have become leaner. This gravitation towards lean practice isn’t new, nor is it a temporary bout of modernity. For as long as I can remember, well before I called it ‘Lean Law’, I’ve seen clients rewarding lean behaviours with repeat business. Then they began voicing it, and it only got louder. Now clients use RFPs to demand better methods from law firms.

If finding new methods is the first step, then developing a lean mind-set is what follows. When this is over, business people won’t forget, or lose their appetite for remote working, crisp reporting or quick solutions. With one or two notable exceptions, almost every business that survives the pandemic will be significantly poorer, and looking for ever greater cost savings and efficiencies. This is a perfect storm for change and those who gravitate towards lean lawyering will find that their skills are in demand more than ever.

[1] A series hosted by Law.Com focusing on lean practice methods

 

COVID-19: New Protections For Commercial Tenants – Are Tenants Now ‘Safe’?

By Milan Patel

01.05.2020

The UK Government has recently announced further steps to protect commercial tenants from aggressive rent collection by landlords including a ban the use of statutory demands and winding up orders where a company cannot pay their bills due to COVID-19 and preventing landlords from using commercial rent arrears recovery (CRAR) unless 90 days or more of rent is unpaid.  These measures support the existing ban on landlords evicting commercial tenants.  All of these measures will remain in effect until at least 30 June 2020.

Does that mean commercial tenants can now relax?

Definitely not.  These measures are temporary and do not alter the terms of the lease.   Once they are lifted, landlords will be free to employ such collection methods again and while some landlords have deep pockets, many more do not and almost all will have investors and/or funders to satisfy so it is highly unlikely that unpaid rent will simply be ignored for long once these protection measures end.

So what should commercial tenants be doing now?

Continue reading “COVID-19: New Protections For Commercial Tenants – Are Tenants Now ‘Safe’?”

Employee Refusal To Return To Work in face of COVID-19 ‘Threat To Safety’ – What Is Your Response?

By Nic Hart

01.05.2020

The effects of the Coronavirus pandemic on the workplace continue.  It is undeniable that the potential litigation arising out of COVID-19 will be far reaching and there will be several areas that Employers need to consider now and when the return to work phase commences in earnest.

In a matter of months the Coronavirus pandemic has not only changed the way millions of employees work but also the way they may now view the work place, particularly how safe they feel within their workplace.

Health and Safety claims may become a real issue for employers as employees either leave or propose to leave, refuse to return to work or take (or propose to take) appropriate steps to protect themselves or others from what they believe is serious and imminent danger from infection. Continue reading “Employee Refusal To Return To Work in face of COVID-19 ‘Threat To Safety’ – What Is Your Response?”

COVID-19 Job Retention Scheme – Summary of Updates to UK Gov Guidance

By Nic Hart

30.04.2020

Whilst I am very mindful of furlough fatigue, there have been further updates to the Government Guidance on The Coronavirus Job Retention Scheme – both How to Claim (short form and long form) and the Guidance. None of these have substantively changed but there are points to note in each, which are as follows.

The How to Claim (short form) deals with some of the practicalities of claiming. For those yet to do so please note that you need to submit your claim in one session – you cannot save it and return later. Sessions will time out after 15 minutes of inactivity.

There has been guidance given on what steps to take following a claim;

  1. keep a copy of all records, including:
    • the amount claimed and claim period for each employee
    • the claim reference number for your records
    • your calculations in case HMRC need more information about your claim
  2. tell your employees that you have made a claim and that they do not need to take any more action
  3. pay your employee their wages, if you have not already.

It must be stressed that Employers should record and retain documentation at all stages of the furlough process, both to be compliant with the requirements of the Treasury Direction but also to ensure that if there is any audit undertaken by HMRC they have the requisite records set out in the Guidance. Continue reading “COVID-19 Job Retention Scheme – Summary of Updates to UK Gov Guidance”

MAC Clauses & COVID-19: A Free Pass For Lenders?

By Drew Salvest

28.04.2020

The Scenario:

A client is prudently engaging with its bank to put in place a credit facility to address working capital needs which it anticipates might grow due to the Covid-19 isolation measures causing its customers to reduce requirements for its services and to pay more slowly than during less distressed times. As the motivation for this client to enter into the facility was its potential exposure to the risks to general economic conditions arising from the pandemic, the client was understandably concerned about the lender’s insistence on the inclusion of a “Material Adverse Change” or “MAC” representation and event of default.

The client’s question to us, after vain attempts to remove the language and tepid protestations from its relationship manager that such clauses “are rarely relied upon”, was whether it had any reason to be concerned.

To be fair to the lender, MAC events of default are rarely relied upon to enforce an event of default. However, the Covid-19 pandemic and the government ordered lockdown is having an unprecedented impact on the UK and the global economy. One has to consider whether the changed circumstances arising from this event might have a similarly unprecedented change in the approach lenders take in limiting losses in their loan portfolios. More importantly, if it does, will a typical MAC clause assist them? Continue reading “MAC Clauses & COVID-19: A Free Pass For Lenders?”