Irwin Mitchell Says Impact On Supply Chains Could Be Devastating

Hundreds of UK manufacturing firms are at serious risk of falling into administration in the coming weeks if they fail to deal with the potential issues relating to their supply chain caused by the Coronavirus, warns law firm Irwin Mitchell.

Restructuring lawyers at Irwin Mitchell say that they are already advising a business that has fallen into financial difficulty after having its supply chain in China disrupted. 

The organisation is currently unable to complete production and faces the prospect of going into administration due to not fulfilling its orders on time.

Andrew Walker, partner and Head of the Restructuring & Insolvency team at Irwin Mitchell, said: 

Expert Opinion

“Many UK manufacturers that have overseas' supply chains are at risk of not being able to complete orders.

“It has already been highlighted how Coronavirus could slow production at Jaguar Land Rover, but the same supply chain issues are affecting other manufacturers of all sizes and these businesses could quickly find themselves in financial trouble as production slows or stops completely and payments become delayed.

“We are already dealing a business which is now in a very perilous financial position but I think the small number we are seeing now is just the tip of the iceberg.

"Businesses in similar situations should review their supply chains immediately and companies may look to alternative sources for raw materials or products that are key to their manufacturing process. Care needs to be taken here, however, as changing supplier may result in a company being required to pay a premium. This could have a significant impact on those companies facing or in financial difficulties or where there profit margins are small.

"Manufacturers with concerns should seek expert legal advice to ensure all options and solutions are considered. Our international networks of law firms, for example, allows us to put clients in touch with other firms across the world along with their suppliers, opening up alterative supplier arrangements and relationships.

"Companies may also wish to consider putting in place contingency and continuity protocols, if they have not done so already, to combat the impact of a future event such as a disease outbreak."
Andrew Walker - Partner

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