When the going gets tough
Released On 14th Sep 2022
Businesses are currently dealing with a wide range of financial challenges including price-hikes for power, shipping, raw materials and fuel (albeit with some short-term Government assistance promised). These inflationary costs impact everyone, and business cost-increases cannot always (or easily) be passed on directly to customers. Consumers and suppliers are in this together, buffeted by the same macro-economic climate. That said, when the going gets tough there are some things that a business can do to maximise its operational stability from a legal standpoint. Solicitor Brian Levine has some timely advice.
Reviewing your B2B and B2C contractual obligations is a good start. This can include all contracts and terms and conditions of business. Do you need to try and renegotiate some of your existing B2B supply chain or services contracts? Are you promising your customers too much in return for too little? Do you need to alter payment terms? Can you extract better value by offering additional goods or services? If you have valuable contracts with limited liability companies or LLPs would you benefit from personal guarantees by the individuals who own them? Do you diversify, or streamline? We can advise you on what is legally possible against the backdrop of your existing contractual arrangements, and we can help you put appropriate frameworks in place to maximise your revenue potential.
Conversely, and often due to circumstances beyond anyone’s control, business may become so difficult that the bills cannot be paid as they fall due. Technically, this might mean an insolvency situation for a company or business. This can put directors at risk of personal liability to creditors. We are happy to advise directors and other corporate officers as to their rights and obligations in such “nuclear” situations and how best to act so as to comply with directors’ statutory obligations under the Companies Act 2006 and Insolvency Act 1986. It may be possible to renegotiate existing contracts to ease any pressure on cashflow, or undergo a restructure or merger, or even a corporate or business sale of the whole concern or some of the assets, including property. We can assist you towards a deal that keeps creditors happy and allows your business to claw its way back to viability.
Lastly, your business health is linked to keeping your people happy. Motivating employees and focussing on overall benefits and compensation (including flexible working and holidays) can reap excellent rewards for businesses. We work closely with our employment team who can advise on your staff contracts, on incentive schemes and on any restructuring that might be necessary.
The bottom line is that, when the going gets tough, it is good to have a trusted adviser by your side.
