COVID-19 and the stay-at-home measures that governments had to implement to ensure the safety of their citizens, resulted in significant operational and financial disruption, including liquidity challenges, for many companies. Customer and employee quarantine, supply chain failures, stranded and/or unavailable inventory, and sudden customer demand reductions are creating serious issues for companies across a far wider range of sectors than initially anticipated. The revenue lost represents a permanent loss rather than a temporary difference and is placing sudden, unanticipated pressure on working capital lines and liquidity.
Lenders will need to play an integral role in the short and medium-term as customers seek to arrange larger facilities, relax covenants, extend due dates and defer payments. Although lenders have risen to the occasion, the reality stands that lenders will need to critically assess each request on a case-by-case basis and the customers must therefore present a well-thought out and viable set of scenarios.
financial impact of COVID-19 - download the full PDF