Overview

In spring 2020, the Czech Republic, like the rest of the world, was severely affected by the coronavirus pandemic. The spread of COVID-19 outbreaks led to drastic shutdowns and reduced operations in almost all sectors of the economy. The loss of income and suspension of payments threatened to lead to the insolvency of thousands of businesses. So in spring 2020 the Czech Parliament approved temporary statutory measures to prevent the collapse of the business sector due to formal insolvency proceedings (the so-called Lex COVID).

On 3 December 2020, the UK Government (HM Treasury) issued a consultation paper (the Consultation) setting out a proposal to implement a new “special administration regime” (the SAR) which it is proposed would apply to any insolvency of an authorised payment institution (a PI) or electronic money institution (an EMI).

On 3 December 2020, HM Treasury published the Government's proposal to implement a new special administration regime for PIs and EMIs (PI and EMI SAR), a copy of which can be seen here.

Lockdown, shutdowns, drops in revenue and related negative impacts of the COVID-19 pandemic faced by companies even still operating and in a healthy state have prompted the Czech government to respond to this situation and implement statutory measures to mitigate such impacts (the so-called LEX COVID), also in the area of insolvency. Most of such measures are only temporary during the extraordinary measures taken by public authorities during the COVID-19 pandemic. LEX COVID, which brings the below-mentioned changes, has already been enacted and came into force on 24 April 2020.

The Czech Government has prepared several measures that should help people and businesses in the challenging times related to the outbreak of COVID-19. These measures are currently divided into several draft laws, covering topics such as insolvency, loans, leases, employment, and court proceedings. We have chosen relevant fields briefly described below and we will provide more detailed information about these relevant fields once the final laws are passed by the Parliament (which should be shortly due to the state of legislative emergency).

Introduction

In re Katy Indus., Inc., 590 B.R. 628 (Bankr. D. Del. 2018) presented an interesting question: If a stalking horse bidder’s successful bid to purchase a company in chapter 11 was partially predicated upon a credit bid, and a portion of that credit bid was challenged after the sale closed, what would be the result for the bidder’s overall successful bid if that portion of the credit bid was eliminated?

Background

Section 363(k) of the Bankruptcy Code grants secured creditors the right to credit bid up to the full amount of their claim as a form of currency to bid to purchase assets securing their claim from a debtor in connection with a stand-alone sale of assets under section 363(b). In a recent opinion from the Bankruptcy Court for the District of Delaware, In re Aerogroup International, Inc., Judge Kevin J.

The power of a debtor or trustee to avoid preferential transfers that benefit certain creditors over others is critical to achieving one of the primary tenets of the Bankruptcy Code – the equality of treatment among all creditors. This ability to recover preferences prevents a debtor from favoring certain creditors over others by transferring property in the time leading up to a bankruptcy filing. Although these preference powers are broad, they are restrained by certain conditions, including a minimum threshold on amounts that can be avoided.

Addressing latent claims in bankruptcy cases has always been a challenge, and debtors are often left with uncertainty as to whether such claims have been discharged.  Although the legal standard for what constitutes a “claim” under the Bankruptcy Code in the Third Circuit has evolved to give debtors and potential claimants more clarity with respect to the treatment of latent claims, the uncertainty remains for plans confirmed prior to 2011.  A recent decision from the District of New Jersey,