Sadly, it would be naive to think that businesses will either fold in the next couple of months, or otherwise survive and thrive.
The factors for business are so complex, and so interconnected, that COVID-19 flow-on effects could be felt by businesses for some time – a business that is fine this year, could be reliant on demand from businesses that struggle on for a year or so before losing the good fight.
So far, so dark. Sorry about that. What’s our point?
Well, the risk of business failure is always a reality. During better times, many people choose not to explore or take-up the steps that are available to protect themselves from the risks of insolvency and its effects. Some businesses may just not see themselves as being vulnerable, or may think they are too busy to get around to looking at it, and others may not think the risk is enough to justify the cost.
In these unprecedented times, the need to consider how you bring yourself, and your business, through disaster should be absolutely real to people.
So what are we talking about?
Well, for starters, there’s a difference between your business that it is right now and the business that you do.
Your current business, and even your brand, may fail – but if the basics of your production can remain, you can get back into business a lot more easily than you would otherwise.
You also want your continuing business to be insulated from the debts or liabilities of the failed business.
There are some curly issues involved – the risk of voidable transactions or securities, general law around defeating the interests of creditors, directors’ duties – but the point is that you can take the opportunity to protect the assets that make your business run, so if the current business fails, you have the best possible opportunity to get back up and running.
If you require any advice or further information on the matters dealt with in this publication please contact the lawyer at Farry and Co. who normally advises you, or alternatively contact:
Wallace Revell
wrevell@farry.co.nz
09 353 6672
The information contained in this publication is intended as a guide only. It does not constitute legal advice and should not be relied upon as such. Professional advice should be sought before applying any of the information to particular circumstances. While every reasonable care has been taken in the preparation of this publication, Farry and Co. does not accept liability for any errors it may contain.