Divorcing Business Owners – the impact of COVID-19

26th May 2020

The divorce process is stressful at the best of times, but the current climate will have made it uniquely stressful for all those involved.

Aside from the practical difficulties COVID-19 has caused, the wider economic impact of the pandemic can have significant implications for those going through a divorce, more particularly with regard to divorce settlements.

The picture has changed – can financial settlements?

The impact of the economic downturn will have already been felt for those who have entered into financial settlements. Parties who were open and honest about the value of their various assets, and had such values assessed and confirmed by impartial experts, are now seeing these figures being rendered obsolete.

This will have a particular impact on arrangements based on the ownership of a particular business, especially true for such businesses in the service or hospitality sectors. The agreements reached are unlikely to reflect the reality of the situation now faced.

To date, the Courts have not been presented with any cases in which business owners have attempted to have the details of a Court Order pertaining to a financial settlement overturned or altered due to the impact of COVID -19 on the value and performance of their business.

To some it would appear common sense that the sudden and unexpected nature of the pandemic means a recent financial agreement could be overturned on the basis of the massive reduction in the underlying value of the assets, such as a business.

History can offer a cautionary tale however, and it should be noted that the banking collapse and financial crash of 2008 was not considered by the Court of Appeal to be a ‘supervening event’ sufficient to render an existing financial agreement null and void (known as a ‘Barder Event’).

On the contrary, the Courts found that a crash of this kind was an example of natural price fluctuation; the argument here of course is that a global pandemic represents a whole different order of challenge, and is not representative of natural price fluctuation.

Experience and instinct would tend to lead to the conclusion that the Courts will be extremely wary of establishing COVID-19 as a general basis for altering Court Orders, if only for fear of opening the floodgates to multiple claims.  If any financial agreements at all are altered on this basis it is likely to be a very small number and in highly specific circumstances.

None of this is to say, however, that a business owner already paying a set amount in maintenance, who can no longer afford to meet the payments due to a COVID-19 related drop in income, cannot apply to have the amount varied in the short term.

Such an application should be made to the Court, although in some cases it may be possible to negotiate directly with the other party to secure a temporary variation.  In such cases any arrangements reached should be set out in writing.

As with most issues concerning the divorce of business owners, experienced legal advice at the earliest stages is recommended to avoid expensive mistakes.  Whatever stage you may have reached in the process, the Family Law team at Ansons is here to help and advise.

If you would like to discuss any aspect of your divorce, including a recent settlement, please speak to Mike Vale of our Family Law team on 01543 267236 or email

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