10 legal advice for companies in times of crisis.
The current context requires companies to have a higher level of diligence in managing their operations and to have order and clarity regarding the legal aspects of such operations. Below I have drawn up a list of 10 legal tips that are worthwhile for companies to take into account to minimize contingencies and achieve a greater degree of resilience in this context of crisis:
Avoid long-term commitments. In this reality it is not advisable to commit yourself in the long term. Although in many cases it is not feasible to establish contractual relationships on a day-to-day basis (leases, distribution contracts or similar), I suggest that the contracts you sign establish terms of duration that allow you to re-evaluate them or even terminate them in a short term. .
clear rules. Establishing clear rules (through acts or agreements) with your partners and collaborators regarding the management of the company is extremely important. Clear procedures and mechanisms for decision-making, use of resources, and administration of your company are key to protecting your assets and maintaining harmonious relationships with your partners.
Exit clauses. Review the procedures and rules for termination or modification of contracts that you have signed. Knowing these procedures in advance will allow you to save time and resources and more effectively plan for any drastic measures you may need to take.
Alternative conflict resolution. Any contract you sign must have an alternative dispute resolution clause. In times of crisis, the number of lawsuits and litigation tends to rise. Dispute resolution clauses help you navigate disputes with greater certainty, less stress and cost
Have in order and at hand all the documents that prove ownership and rights over your assets. Property titles, securities, vehicle circulation cards, among others, are important documents that evidence your rights over your assets and it is necessary to have them available in case you wish to sell such assets or give them as collateral.
Credit support. This advice is similar to the previous one, but related to credits that you have granted. In principle, any credit that you have given to a third party (loan, credit for bill payment and other similar) and the rights that you have under it, must be documented. Therefore, I recommend you verify that all your credits are properly supported and their guarantees (if any) are up to date.
It seems obvious, but fortunately it is not. Falling into default on obligations not only weakens your negotiating position in the face of a possible contract modification or debt restructuring. It can also generate additional charges (interest). Above all, it is important that you remain in compliance with your obligations in accordance with what has been agreed.
Restructure debts If you are considering this alternative, present payment proposals to your creditors that are backed by assets that guarantee them. You can not only give real estate (mortgages) as collateral. We can also offer vehicles, inventory, invoices, accounts receivable among other assets as guarantees. These guarantees can be registered in the Registry of Movable Guarantees, which gives greater security to your creditors regarding the payment of your debts.
Transparency and good faith. In this context of crisis, transparency and good faith become even more scarce and become more valuable. In any contractual relationship you have, always act transparently and in good faith. Assume only obligations that you are sure you can fulfill. Do not create false expectations and openly and transparently discuss with your creditors any situation that could lead to a possible default.
Maintaining this human resource is important but on the other hand you must minimize your expensesThe suspension of the employment contract (and not necessarily its termination) may be the tool that allows you to achieve this.
The tips that we share here are part of the content of the e-book "100 tips from 10 experts for Entrepreneurs in times of Covid-19" an excellent initiative promoted by Plata con Plática and that contains invaluable advice from various experts in different branches related to business. You can find the Ebook in the link below
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