Along with tightening social controls, the months ahead will be defined by various critical relationships and the rules that govern them. Of course they all interlock: material change in any of them impacts each of the others. Which causes multiple complexities in decision-making and risk assessment processes, both within a business and when looking at critical suppliers and customers:
Landlords and Tenants:
The new UK Corporate Insolvency and Governance Act (CIGA), which took effect in June 2020, ushers in permanent changes to the English insolvency and restructuring landscape as well as temporary, and largely retrospective, measures to help mitigate the economic impact of the COVID-19 pandemic.
The three permanent additions are:
THE LANDLORD'S POSITION' TO CVAs v PRE-PACKS
There has been much press coverage in recent years on Tenant CVAs and the tempo on these has increased in recent weeks with the approval of CVAs for New Look, Pizza Express and Yo Sushi! amongst others.
The devastating effect of the global COVID-19 pandemic has been felt across the entire leisure and hospitality sector, but nowhere has felt the pain quite as acutely as the UK's night-time economy which, without extended Government support, may struggle to survive. With crowds the new enemy, many venues will remain closed for the foreseeable future and possibly for good.
The Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA") came into force on 30 July 2020. The consolidation of all personal and corporate insolvency and debt restructuring legislation into a single statute, along with other legislative changes, seeks to further strengthen Singapore's position as an international debt restructuring hub. This note highlights certain key changes effected by the IRDA that are relevant to loan market participants.
Restrictions on ipso facto clauses
WELCOME TO OUR LATEST EDITION OF OUR TRUSTEE QUARTERLY UPDATE!
LEGISLATION
CORPORATE INSOLVENCY AND GOVERNANCE ACT RECEIVES ROYAL ASSENT
The Corporate Insolvency and Governance Act 2020 received Royal Assent on 25 June 2020. As reported in our last Update, the Act brings in some major changes to the insolvency regime which are potentially relevant to scheme trustees seeking to enforce their rights against sponsoring employers, in particular:
In Re PT MNC Investama TBK [2020] SGHC 149, the Singapore High Court provided guidance as to what is sufficient for a foreign company to establish standing to avail itself to the Singapore restructuring regime. Specifically, the factors expressed in the "substantial connection" test under the IRDA1 are non-exhaustive and courts will consider other factors involving "some permanence" to permit foreign companies to restructure in Singapore.
Establishing a "substantial connection"
The ongoing pandemic will cause upheaval across all markets and sectors. Business models may become unviable. Sound businesses will suffer short-term liquidity crises. Customer behaviour may alter. Distress opportunities can create opportunity if buyers can work to an accelerated timeline.
1. IT'S NOT JUST INSOLVENCY
The COVID-19 pandemic has already led to business failures and forced others into negotiations with lenders, landlords and other stakeholders. For many sectors, the crisis has reinforced or accelerated the challenges that they were already facing. Government support measures including loans, furlough and temporary legislative changes have delayed some of the usual pressure points, but as support is eased, many businesses will have to find cash from significantly reduced turnover to satisfy deferred liabilities or repay loans.
The Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA") came into force on 30 July 2020. The consolidation of all personal and corporate insolvency and debt restructuring legislation into a single statute, along with other legislative changes, seeks to further strengthen Singapore's position as an international debt restructuring hub. This note highlights the new restrictions on ipso facto provisions effected by the IRDA, which will be of particular interest to loan market participants.
Restrictions on ipso facto clauses