Am I insured?
Most businesses are not covered for interruptions caused by COVID-19. Most policies provide coverage for business interruptions by way of insurance over property and casualty damage. The COVID-19 pandemic is not likely to trigger coverage under these policies in light of the absence of any damage to property (like one would see in a fire or flood). Accordingly, absent any additional coverage most businesses will find that their insurance providers are unable to assist as a result of the current pandemic.
This is, however, a continually evolving situation, so policyholders are wise to review their specific policies and keep abreast of the ongoing developments. This includes communicating with your insurer, and keeping informed of the positions of the government and the courts in respect of whether losses arising out of COVID-19 are insurable and covered.
Am I eligible for government assistance?
Canada's COVID-19 Economic Response Plan (the "Plan") provides support to businesses affected by COVID-19. The Plan helps businesses avoid layoffs, provides them with increased access to credit and insurance, and allows for tax deferrals. There are different application procedures for the different programs under the Plan. For example, for the Business Credit Availability Program (the part of the Plan providing increased access to credit), businesses will need to go to their own financial institutions to determine whether they are an eligible business and to get a referral to the Program.
To determine to what extent (if any), the Government of Canada, the Government of Ontario and the City of Toronto have any COVID-19 financial support plan for businesses, visit the Government of Canada website here, the Government of Ontario website here and the City of Toronto website here for the latest updates and keep abreast of any changes or additions thereto.
Negotiation and ADR
The COVID-19 pandemic has created a world of uncertainty which means clear and direct communication is crucial to moving forward. Therefore, it is advisable to start negotiations early, and attempt to re-negotiate parts of the contract while honouring the other obligations under the rest of the contract (alternative dispute resolution mechanisms may prove useful where negotiations do not lead to an apparent resolution).
While it may be natural to enter negotiations with an adversarial and distributive approach (each party positioning to limit their respective losses), landlords and tenants should instead try to approach negotiations with a more collaborative and integrative approach. In this way, parties can more successfully navigate the crisis that countless businesses are facing. One successful approach may be to negotiate the terms by which a tenant can delay performance of an obligation – like paying rent. By entering into an agreement where payment of a portion of rent is deferred, but not forgiven, both parties may find themselves more successfully navigating the circumstance. The deferred rent can then be paid back gradually after operations begin to return to normal, and both the landlord and tenant can work together to return their businesses to their former standing. This should be appealing to both parties, as a contrasting hard-line approach of demanding prompt performance of all lease obligations may lead both the landlord and tenant to the worse possible outcome – incurable rental arrears, a vacant premises, and a bankrupt business.
Conclusion
As with many crisis situations, open and ongoing communication is going to be a key to arriving at the best possible result. Keeping in close contact with insurance providers, suppliers, customers, and landlords over the course of the pandemic is going to put businesses in the best position to succeed. As will speaking with legal counsel to assist in navigating the interpretation and negotiation of existing and future contracts.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
