New Amendment to the Israeli Insolvency Law – grant of the option for a stay of proceedings against a corporation for the purpose of approving a debt arrangement without the appointment of an external officeholder to replace the company’s management

On 4 March 2021, an amendment to the Israeli Insolvency and Rehabilitation Law (Amendment number 4 – Temporary Provisions – the New Coronavirus) 2021 (“Temporary Provisions”) was published. This Temporary Provisions will become effective on 18 March 2021.

The Finance Act 2020 provides that directors, managers, shareholders, lenders and others can be made jointly and severally liable for the outstanding tax debts of insolvent (or potentially insolvent) companies and limited liability partnerships (LLPs).

The surprising emergence of COVID-19 in 2020 has caught many companies by a complete surprise. Boards of directors of companies, of every size and from each industry, who have just recently approved their budget for 2020, have fallen into a new reality – suspension and, occasionally, complete stop, of business activity. The economic effect of the deadly virus is yet to be fully realized, however it is safe to assume that many companies and business entities who suffer liquidity issues during the crisis, may face insolvency or quasi-insolvency proceedings.

The below is a quick snapshot of three recent tax-related developments in the insolvency and restructuring sphere.

Farnborough – appointment of a receiver and tax grouping

The below is a quick snapshot of three recent tax-related developments in the insolvency and restructuring sphere.

Farnborough – appointment of a receiver and tax grouping

With two decisions (No. 1895/2018 and No. 1896/2018), both filed on 25 January 2018, the Court of Cassation reached opposite conclusions in the two different situations

The case

The Constitutional Court (6 December 2017) confirmed that Art. 147, para. 5, of the Italian Bankruptcy Law does not violate the Constitution as long as it is interpreted in a broad sense

The case

With the decision No. 1195 of 18 January 2018, the Court of Cassation ruled on the powers of the extraordinary commissioner to require performance of pending contracts and on the treatment of the relevant claims of the suppliers

The case

The Court of Cassation with a decision of 25 September 2017, No. 22274 confirms that Art. 74 of the Italian Bankruptcy Law provides a special rule, which does not apply to cases to which it is not explicitly extended

The case

With the decision No. 1649 of 19 September 2017 the Court of Appeals of Catania followed the interpretation according to which a spin-off is not subject to the avoiding powers of a bankruptcy receiver

The case