Covid-19 questions to ask yourself
We know.
Whether your company is large or small, you already have a million COVID-19 questions that need answers, and you don’t think you need to wrestle with any more. But here are a dozen more, to at least consider
adding to your existing list.
1. Have I looked at my existing Business Insurance policy, to see if it might offer anything in the way of benefits in light of the current fact situation? Is it worth a call to the Insurance Agent for expert input?
2. Do any of the company’s key contracts contain personal guarantees, or acceleration clauses, or a force majeure provision? Might a call to the company’s lawyer result in a more definitive response, and a better understanding of the consequences?
3. Do I fully understand all of the various support programs that the federal government is offering (e.g. at https://www.canada.ca/en/department-finance/economic-response-plan.html) or should I contact the company’s accountant to seek expert assistance and guidance?
4. If the company is offering Vouchers for future travel instead of cash refunds, should I speak with its accountant at the same time about how the impact of those Vouchers will be reflected on the company’s next set of financial statements?
5. Once I get an answer to that question, should I make an appointment to speak to the Bank or other major creditor about how good (or bad) those financial statements will look, and what impact that might have on existing credit facilities? Or is it better just to wait?
6. In addition to the Bank, who else ought I consider talking with? Who are the company’s major suppliers? Who are its significant clients? What sort of commercial concessions can be discussed with them? Can key contracts be renegotiated? Ought I make advance contact with IATA or a provincial regulator such as TICO?
7. Can I get the landlord onside with granting a concession, by pointing out how it can best document the concession? (HST is owing to Ottawa when money is “payable”, not when it is actually “paid”, so it’ll have to pay the tax even if your rent money has not been received, unless it is documented that rent won’t be “payable” until some future date.)
8. What about cash flow? Will the company make it to the point at which a new set of financial statements will be finalized, or is it at risk of dying for want of cash flow before then, unless something is done?
9. Due to the fact that corporate directors and officers may face personal liability if the company fails to honour its obligations:
a) to remit source deductions and HST
b) to pay employee wages,
c) to fund existing pension plans,
d) under the Bankruptcy and Insolvency Act, if that is a possibility, have all of them been advised – in writing – of the risks they face?
10. Does the company own any non-core assets, that can be sold in aid of improving its financial situation?
11. If staff layoffs or revised working hours are being considered, do I know what can be done legally, and what cannot?
12. Does the best way forward involve a sale, or a merger, or maybe even an acquisition?
Ursula K. Le Guin is an American author who says “There are no right answers to wrong questions.” We say “There are no wrong answers to right questions.” So, keep on asking.
Heifetz, Crozier, Law is a Toronto law firm that has for years represented all aspects of the Canadian travel industry. The lawyers at HCL also maintain a non-travel practice, covering litigation, real estate, Wills, corporate/commercial matters, etc. To contact HCL, e-mail [email protected].