Following the recent outbreak of the Coronavirus (COVID-19), companies are focused on the financial and commercial implications, including problematic supply chain disruption, workforce disruption and sweeping travel restrictions on both goods and people.

Because the lasting impact and full scope of COVID-19 remains largely unknown, companies must be aptly equipped to deal with these and any other challenges that may arise, particularly those that could result in unforeseen financial distress. Being proactive in the coming months can help companies preserve value and prevent additional harm. Impacted industries include:

  • Travel (airlines, hotel, cruise lines, tour operators)
  • Food and Beverage/Restaurants
  • Entertainment (movie theatres, live sport venues and teams)
  • Real Estate
  • Transportation/Shipment
  • E-Commerce (supply and delivery disruption)
  • Oil and Gas/Power
  • Retail (especially luxury sector)
  • Pharma/Life Sciences/Healthcare
  • Manufacturing (supply chain disruption and a drop in demand)
  • Healthcare (demand/supply and capitation related issues)

To successfully navigate this uncertainty, management should be prepared to evaluate modifications to current business plans to address changes in operations, potential financial covenant defaults and other possible contract breaches or defaults; regularly update their requisite cash flow forecasts; and monitor their ability to pay upcoming debt maturities or obtain additional financing, as needed.

The subsequent chart outlines considerations that will help companies proactively and successfully navigate the potential impacts of the spread of COVID-19: