Frustration of contract: or not

[Lynnzer]

I suspect there are hundreds or even thousands of business all facing potential insolvency proceedings due to the effects of Covid. So I would like to start a discussion based on the problems for both parties to a suppliers contract.
Let's start with something relatively simple. Shop places an order, ie makes a contract for the supply of goods with Supplier.
Supplier B has always allowed a payment scheme to pay off the invoice over, let's say 14 weeks. Or the Supplier has always accepted this arrangement by prior precedent.
Shop makes payments from income each week, then BANG. Along comes covid and the shop has to close. It's not a voluntary arrangement but a legislative requirement that neither the shop or supplier had prior knowledge of, and had no reason to suspect may happen.
The shop cannot sell goods and pay the bills but does intend to when able.
Simple enough scenario eh?
Supplier is very considerate and doesn't make demands knowing the situation, but may be forced into further action as time goes by due to their own pressing needs.
Supplier makes all the right approaches to have their payments recommenced but shop is still unable to make any.
Since this will be common to lots of other shops, how would this stand in court for a winding up order? I believe it may well be able to be presented as frustration of contract. The shop has every intention to make payment but only when able to do so.

[Lynnzer]

Well that generated a lot of interest didn't it?
So, things are progressing somewhat so I'll start at the very beginning.
One particular shop owner finds herself (not me, I'm not a woman) in a quandry.
She has a shop that primarily sells fashions aimed at bride's and groom's mothers, and wedding guests.
She places all her spring and summer orders in the autumn of the previous year for delivery starting over late autumn and into spring.
Probably 95% of orders were fulfilled before shutdown, with most suppliers being paid in instalments, some by agreement and some as an already established payment method from previous years. Despite most suppliers receiving payments until shutdown, it became impossible to pay anything from that time on as shops were closed by Governmental decree. The remaining balance of unpaid invoices amounts to circa £175,000.

As soon as shutdown was imposed a generic email was sent to all suppliers advising of the likely impossibility of making payments as planned due to the shutdown. The email also expressed the potential longer term problems which would also have implications for payments.

Since shutdown has ended the wedding season has more or less dwindled to perhaps 5% of normal takings as there's still no certainty of what's happening regarding future weddings, how many attendees can be present and even if they could be shutdown again. Most ladies have delayed their wedding plans until next year as a result and of course don't feel like risking it by coming out to shop for their outfit just yet.

At least one of the suppliers is now at the point of taking action for full payment, which is impossible. So the way ahead needs careful planning.

I have attached a pdf of the general email sent out so you can see what wording can be relied upon to make a case for frustration of contract, or something else if appropriate.

My own feelings, which may be wrong by a million miles, is that this seems to fit bill for a frustration of contract.
The contract was made between supplier who expected that the goods would be sold in the trader's shop. The trader bought them for that same reason and the result of the imposition of shutdown frustrated those objectives.
Both parties, ie supplier and trader had no prior knowledge or expectation of such an event interrupting normal trading.
The cessation of normal trading was imposed by law
Neither party was at fault in the situation.
I have trawled for other discussions on frustration of contract and found this.

I'll keep it short at that for now and build on it as the thread develops, So please read, digest and add to this if you can.

Oh, Just in case I forget to bring it in later I want to consider the implications of VAT here too. So for instance the outstanding balance for a supplier is,say £12000, and that includes VAT of £2000. Would that be a legitimate sum to have included in any claim since it would probably be reclaimed from HMRC under the bad debt relief provisions. I believe that would result in double recovery which has resulted in cases being dismissed as abuse of process.

notification on coronavirus problems-redacted.pdf