Prompted By COVID-19: The UK Government Introduces Corporate Insolvency & Governance Bill

By Linda Crow


Last week the UK government introduced the Corporate Insolvency and Governance Bill in Parliament.

The main objective of the Bill is to provide businesses with the flexibility and space needed to continue to trade during this difficult time caused by the COVID-19 pandemic. That said, the provisions around the new moratorium and the new restructuring plan proposal have been under consideration for a few years.

The Bill’s measures can be split into three categories:

  1. Those that provide greater flexibility, allowing companies protection from creditor action and safeguarding supplies whilst it explores options for rescue.
  2. Temporary suspension of parts of insolvency law to support directors continuing to trade during the crisis without threat of personal liability and to prevent aggressive creditor action.
  3. Temporary extension of certain times for filing documents at Companies House and temporary relaxation of strict compliance with constitutional requirements relating to corporate meetings (including AGMs).

The insolvency measures are: Continue reading “Prompted By COVID-19: The UK Government Introduces Corporate Insolvency & Governance Bill”

High Court Judgement On Restrictive Covenants & Garden Leave

By Nic Hart


The Queen’s Bench Division of the High Court have held in Square Global Limited v Leonard that the absence of a garden leave set-off clause will not be fatal to a non-compete post termination restriction, touching on a the widely debated relationship between garden leave and non-compete clauses in employment contracts.

The case involved an employer’s attempts to enforce periods of garden leave and subsequent non-compete restrictions on an employee consecutively. The employee in question had resigned and in response claimed constructive dismissal on the basis that his employer had destroyed or seriously damaged the necessary relationship of trust and confidence between the parties, in breach of the implied term in the contract of employment. The High Court held on the facts that the employee was not entitled to resign summarily and by doing so, he had failed to give six months’ notice of termination and was in breach of his employment contract.

The employer sought to enforce a period of garden leave reflecting the six months contractual notice from the date of resignation, in addition to a further six months’ protection from the end date of that notice period on 11 May 2020 under the non-compete clause in the employee’s contract. This would effectively afford the employer a total of 12 months protection. The High Court were satisfied that the six month non-compete clause was pursuant to the employer’s legitimate business interests capable of requiring protection by restrictive covenants, and was reasonable, going no further than necessary to protect the employer’s legitimate business interests.

The High Court then went on to assert as follows:

“The garden leave clause which is included in the contract exists to cater, among other matters, for a situation where [the employer] has concerns about an employee’s conduct (e.g. harvesting client information, or engaging in deceptive behavior), and so chooses to restrict the employee’s duties during the notice period. On the assumption that such concerns have reasonable foundation, it would not then be unreasonable to enforce the full period of the post termination restrictions.” (Paragraph 191)

Continue reading “High Court Judgement On Restrictive Covenants & Garden Leave”

High Court Rules On The Effect Of Confidentiality Clauses In A Settlement Agreement

By Nic Hart


The High Court have held in Duchy Farm Kennels v Steels that an employer cannot avoid paying out on a settlement where an employee is in breach of a confidentiality clause, unless confidentiality is genuinely a condition of the agreement.

Here, the employer agreed to pay the employee a settlement sum in instalments in full and final settlement of the employee’s employment tribunal claims. The COT3 agreement also included:

  • a clause under which the parties agreed to treat the fact of and the terms of the agreement as strictly confidential (‘the confidentiality clause’); and
  • a warranty that the employee had not previously disclosed the facts and terms of the agreement to any other person.

The employer subsequently did not pay the final instalment, and the (now former) employee issued proceedings for payment. The employer sought a declaration that the sums were no longer recoverable on the basis of breach of the confidentiality clause in the agreement. Continue reading “High Court Rules On The Effect Of Confidentiality Clauses In A Settlement Agreement”

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


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


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”

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


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


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

By Drew Salvest


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?”

Is COVID-19 A Contractual “Get-Out-Of-Jail-Free” Card?

By Sue Laws


COVID 19 is having a massive impact on supply chains and business continuity and, post lockdown, questions will be asked about who pays for this. The knee-jerk response of many businesses is that the pandemic is a unique, unforeseeable “Act of God” and that businesses which have furloughed staff or been forced to close during the lockdown or have had difficulties with their own supply chains or customers reducing purchase volumes, have no liabilities to or remedies against others for the consequent losses sustained. The reality is that on a case by case basis, businesses already adversely affected by this pandemic may find that contractual claims are being made against them or that they have a route to mitigate their losses by looking at their own contractual or statutory rights.

Key to the analysis which will be carried out is a bit of “jargon-busting” and debunking some commonly held views: Continue reading “Is COVID-19 A Contractual “Get-Out-Of-Jail-Free” Card?”

Is Coronavirus The New Asbestos? Steps For Mitigating Litigation Risk

To mitigate the risk of future mass tort litigation, we look at some practical steps which businesses can take before re-opening their doors

By Sharon Caffrey & Alex Geisler


This is a hypothetical case study. It’s set in the future, and it’s about a Coronavirus mass tort case. Our trial opens like this:

“Ladies and gentlemen of the jury, I represent the family of Mr Smith. The facts of the case are that he died of Covid-19, and that he was in three commercial locations during the infection window. 1) He went to work 2) He stayed at a hotel 3) He shopped in a store, and these are our three Defendants. Mr Smith travelled alone in his car to these locations, and no-one else in his family was sick before he broke home isolation to go to these places. All three of these Defendants reopened for business to make money, and one of them is where Mr Smith was exposed to the deadly virus. These are the facts of the case, and they are not in dispute.”

Aside from borrowing the cadence from Aaron Sorkin[1], does this sound far-fetched? Well, consider this. Businesses will reopen and people will leave the relative safety of home isolation. Some will get sick, and tragically some will die. The question is not whether there will be litigation, it is what will the ground rules be? So, imagine that you’re a Defendant on this imaginary docket, and ask yourself this, what are my possible defences?

Continue reading “Is Coronavirus The New Asbestos? Steps For Mitigating Litigation Risk”

© 2009- Duane Morris LLP. Duane Morris is a registered service mark of Duane Morris LLP.

The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

Proudly powered by WordPress