The Austrian “Bundesgesetz über Sanierungsmaßnahmen für  die HYPO ALPE-ADRIA-BANK INTERNATIONAL AG” (HaaSanG), published on 31 July 2014 in the Austrian Federal Law Gazette and implemented in August 2014 by the Austrian government, paved the way for the establishment of Heta Asset Resolution AG (Heta) as a wind-down vehicle to assume and manage large parts of the assets of the failed Austrian bank, Hypo Alpe-Adria Bank international AG (HAA).

The European Commission has reached agreement to update the current insolvency regulation known as Council Regulation (EC) No 1346/2000 dated May 29, 2000 on insolvency proceedings.  The goal of the new Regulation is to rescue companies in distress. The proposed insolvency Regulation will change the member states’ insolvency proceedings with respect to both personal and corporate insolvencies and will include modified restructuring options that may not always result in a formal insolvency proceeding and liquidation.

The German Federal Government’s various aid measures for employees, self-employed persons, small, medium and large enterprises are suitable for alleviating personal hardships, reducing the economic costs of insolvencies and plant closures and supporting the economy. In addition, it is important that the German Federal Government will play also a constructive role in overcoming the crisis on a European level, to avoid the COVID19 pandemic leading to a European sovereign debt crisis.

On March 23, 2020, the German Federal Government (Bundesregierung) published a draft bill to mitigate the consequences of the COVID-19 in civil, insolvency and criminal procedural law.

In this article, we focus on working capital and consider ways a business can seek to weather the storm and preserve all-important liquidity through this challenging period.

Practical Tips

Given the unprecedented challenges presented by COVID-19 globally, what can senior management do in order to manage and mitigate the risk to the company's financial health?

The German Federal Ministry of Justice and Consumer Protection is preparing new legislation suspending the obligation to file for insolvency in order to protect companies that encounter financial difficulties due to the coronavirus crisis (see here).

On 12 March 2018 the European Commission published a proposal for a Regulation to govern the law applicable to the third-party effects of assignments of claims (the “Assignment Regulation”).

The proposal of the Assignment Regulation adopted by the European Commission deals with which law applies to determine the effectiveness and perfection of the transfer of title – and the creation of other rights like pledges and charges – in relation to claims and receivables vis-a-vis third parties.

In the context of German restructuring, bridge loans (Überbrückungskredite) are loans that are granted to financially distressed companies until a restructuring plan is formulated in order to avoid the company’s insolvency. In most cases, such loans are granted for a limited timeframe. After the restructuring plan has been finalized, renegotiations are usually required, in particular between the company, the lender and the company’s other creditors.