What are the legal aspects of corornavirus?
Answers
Explanation:
Corona Virus currently has our whole life in a stranglehold and affects our everyday life. This not only from a medical or economic point of view, but also from a legal point of view. As this situation is likely to continue for some time and the economic consequences are difficult to assess at present, companies and entrepreneurs should start thinking today about how their companies can cope with the crisis in the longer term. What is certain is that there will be life after COVID-19. Therefore, it is important to survive the time until then as unscathed as possible.
In the following, we would like to highlight some (legal) aspects and priorities such as cash and debt management, operations and internal business processes, employment and tenancy law aspects, but also contract management or restructuring issues, which should be considered by every company and entrepreneur in the current situation.
1. Cash management and Cash Preservation
Companies usually go bankrupt not because of a lack of assets, but because of a lack of liquidity. In the current situation, therefore, great attention must be paid to cash management and the maintenance of sufficient cash reserves. Only with sufficient liquidity can a company meet its financial obligations and maintain its operations even in a crisis.
The Swiss Federal Council has reacted quickly and practically with its aid programme for small and medium size enterprises. For up to 10% of last year's turnover, up to a maximum of CHF 500,000.00, a loan secured by the Swiss Confederation can be obtained from the company's main bank without any major formalities. The high demand shows that many companies are concerned about their liquidity and have therefore requested such a bridging loan.
As easy as it is to obtain such a bridging loan, it is also very demanding to handle. These bridging loans are intended to help companies affected by measures to combat the spread of the corona virus to survive these measures. For this reason, the Swiss Confederation has imposed conditions so that the loans are only used to maintain liquidity. For example, no investments in fixed assets may be made during the term of the loan (only replacement investments are permitted). This can lead to restrictions, especially in the medium to long term, if no important acquisitions or business expansions can be made, which might possibly ensure the survival of a company.
2. Aspects of Debt Collection Law
However, even a debt rescheduling with the help of the Swiss Federal Government's bridging loan may not really help a company to maintain its liquidity base in the long term. If, for example, a company needs the bridging loan it has received to pay back due debts to suppliers, its liquidity base is not further strengthened as a result. Although the consequences under debt enforcement and bankruptcy law may be averted in the medium term, liquidity will be lacking elsewhere.
In the current situation, it is therefore more advisable to talk to creditors in order to negotiate an extension of payment periods, a deferral of payment or instalments or to offer collateral for outstanding debts, e.g. in the form of a joint and several guarantee, in order to protect one's own liquidity rather than to use it up.
On the other hand, companies should also protect themselves as creditors against their own customers and debtors in order not to run into a liquidity bottleneck. An expedient means of doing this could be to adapt their own invoicing process or to shorten their own payment deadlines so that their own invoices can be sent, paid or collected more quickly in the event of non-payment.
Defaulting debtors are currently benefiting from the ban on debt collection imposed by the Swiss Federal Council until 19 April 2020, as well as from the judicial vacations that have been in force since 21 March 2020 and the associated factual standstill in payment deadlines. For the time being, this may lead to relief or postponement. However, it should be borne in mind that debt collection and legal action will continue after the expiry of these deadlines and that the debtors' obligation to pay will therefore not be suspended. It therefore seems appropriate here too for the company, as a creditor, to actively seek dialogue with its defaulting payers and to discuss payment options (e.g. insatlments), deferrals etc. before it is too late for both creditors and debtors.