Relationship counselling for distressed businesses.

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    Brokers and their commercial lines clients adopting a wait and see attitude towards the Coronavirus fallout are wasting valuable time. This is the opinion of senior parter at BDP Attorneys. “My phone hasn’t stopped ringing” said George De Beer. He used as an example a client who, in the days leading up to the lockdown, had her order book decimated, almost overnight. “Smaller businesses, even when they’re well-run  like my client’s is, are on the ragged edge” he said. “Two years of recession has left many businesses,  big and small, with little surplus cash. Many only remain solvent by the narrowest of margins” he said. 

    “In the case of this client, a particularly large payment for stock had just cleared her bank” he said. “That stock would have seen her through the usually lucrative Easter season. She had worked hard to ensure her order book was full”.

    But then the cancellations started coming. De Beer’s client supplies the hospitality sector with a range of perishable products. To compound her problem this type of stock has a narrow expiration date. 

    Almost overnight the business she had built up over several years seemed at risk of being decimated by factors entirely outside of her control. She is unable to make April’s payment on the smallholding she leases. She is also unable to pay her staff. 

    The rental property serves as both her home and business premises. With her income cut to nearly zero the future looks bleak. De Beer is assisting this client with business rescue. 

    “The Covid-19 pandemic is mostly not an excuse for non-payment of accounts that are legally due” said De Beer. “My client continues to enjoy occupation of the premises, and while her cash reserves are due to circumstances beyond her control, one needs to realise that her landlord is also a small business owner, and is probably hurting just as much” he said. “Negotiating a solution is in both parties interest”. 

    Beyond the practical impact of a government enforced lockdown prohibiting people from leaving their homes, except for clearly prescribed reasons, being evicted at this time is both impractical and heartless. 

    Covid-19 is going to deliver a crippling blow to the economy. Not an ideal time to be looking for a new tenant. De Beer is adamant that the earlier parties begin talking, the better the potential for a successful outcome. “Communication is key” he said. “Do not waste time hoping the problem will just go away”.

    De Beer has made himself available to our readers on george@bdplaw.co.za