It is generally accepted that the last quarter of 2020 will be a risky period for many businesses. The reason for this is not far-fetched, although it is maybe a little too easy to put all the blame on Corona. In any case, it is no longer a disgrace to have to admit problems to pay all suppliers.

During lockdown period, many companies were still able to survive with the special government coronacrisis measures. But now, as these measures are being systematically phased out, risk of bankruptcy has increased.

Algemeen wordt aangenomen dat dit najaar een gevaarlijke fase wordt voor vele ondernemingen. Naar de reden daarvoor hoeven we niet ver te zoeken alhoewel het misschien een beetje te gemakkelijk is alle schuld in de schoenen van Corona te steken. Het is in alle geval al lang geen schande meer om te moeten toegeven dat het soms moeilijk is om alle leveranciers te betalen.

On entend de manière générale que cet automne sera une période dangereuse pour de nombreuses entreprises. Et il n'est évidemment pas nécessaire de chercher bien loin pour en connaître la raison, bien que la situation économique difficile actuelle ne trouve pas sa cause unique dans la crise subie suite au Coronavirus. En tout cas, il n’y a rien d’honteux à admettre que l’on peut avoir du mal à payer tous ses fournisseurs.

Late in the evening on 30 July, the last day before its summer break, the Irish parliament (Oireachtas) passed the Companies (Miscellaneous Provisions) (Covid-19) Bill 2020. This is likely to be signed into law and commenced within two weeks.

Three of its provisions are particularly relevant to insolvency processes during the COVID-19 crisis.

Creditors’ meetings

The Irish Government has published the General Scheme of a Bill and related secondary legislation to address practical issues that have arisen for companies and cooperative societies as a result of the Covid-19 pandemic. We examine the scope of the measures and next steps for entities that can avail of its provisions.

Duration of proposed temporary measures

Het retentierecht dat reeds lang aanvaard wordt als een handig middel om alsnog betaald te worden, kreeg pas in 2018 een wettelijke basis met de nieuwe Pandwet. Onlangs kreeg het retentierecht nog een een steuntje bij van het Hof van Cassatie. 

1. Waar gaat het over?

Het retentierecht is een handig middel voor schuldeisers die niet betaald worden en in het bezit zijn van een goed van hun schuldenaar.

For many companies facing financial stress, restructuring liabilities is the only way for their business to survive. Consensual restructuring, or voluntary workout, requires agreement from creditors to reorganise the company’s liabilities, and is typically implemented by agreement between the company and its creditors. Court-based restructuring processes, on the other hand, involve at least some degree of legal coercion of creditors to vary or release liabilities.

Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the leisure, travel/tourism, retail and hospitality sectors. These sectors will face longer term challenges due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer. However, these are not the only sectors that will suffer.

The Office of the Director of Corporate Enforcement (ODCE) has provided guidance on its approach to directors of companies, made insolvent by the COVID-19 pandemic, who act in good faith on objective evidence in trying to rebuild their businesses.

The issue

The consequences of the COVID-19 crisis have made many businesses that were solvent, and will likely become solvent again, technically insolvent.

Notwithstanding the phased return to some level of normality, some businesses will continue to be significantly affected, particularly those in the hospitality sector where longer term challenges may be encountered due to social distancing requirements, consumer unease and the likely absence of international travel for many months, or perhaps even longer.