Belgium has already taken numerous measures to mitigate the economic impact of the coronavirus (COVID-19). The federal government has now also decided temporarily to protect debtors affected by the coronavirus crisis from creditors by imposing a stay on creditors’ right of creditors to enforce debts, terminate or dissolve existing agreements early and initiate bankruptcy proceedings.

The banking regulation Q&A series provides a comprehensive overview of the rules governing the banking sector in Luxembourg. Today's chapter focuses on recovery, resolution and liquidation.

What options are available where banks are failing in your jurisdiction?

The impact of COVID-19 is being felt at all levels of the economy and will work its way through bankruptcy courts for years to come. In these early days, many creditors who are themselves suffering are providing assistance to troubled companies. Suppliers and commercial landlords are agreeing to various forms of relief, including modified credit terms and rent relief to allow customers to bridge this period of unprecedented disruption. While these corporate good Samaritans are providing immediate aid they may be subjecting themselves to the risk of future losses.

The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.

As the outbreak of COVID-19 continues to develop, unprecedented issues are affecting the private equity industry. We have identified certain challenges both on a fund and portfolio company level, and measures that will be implemented by the Dutch government that can help you and your portfolio companies to survive the COVID-19 crisis.

Would you like to view the most important topics, measures and tips we have selected and our dedicated private equity team? Read the pdf-file below.

In ordinary business circumstances, the directors/managers of a Luxembourg company have a duty to file for bankruptcy within one month of the meeting of the two criteria for bankruptcy (under threat of criminal sanction) – this is the so called “Insolvency Filing Obligation”. The two parts of the test for bankruptcy are: (i) cessation of payments (or so called missed creditor payment) and (ii) loss of creditworthiness.

Last week, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law, implementing broad relief for individuals and businesses affected by COVID-19. One of the sections of the CARES Act receiving less attention is a temporary amendment to the Bankruptcy Code to provide streamlined reorganization procedures for businesses with debt of less than $7.5 million.

Introductory remarks

The coronavirus (COVID-19) is currently causing concern and uncertainty and poses challenges to companies and individuals alike. A number of legal issues are also emerging, whether in relation to contractual obligations, labour law matters or corporate law aspects. This article aims to highlight the most important points from a Swiss law perspective and to clarify legal issues in the elaboration of possible courses of action.

1. Commercial contracts

1.1 Force majeure

Certain governments have taken (extensive) measures to help businesses and its employees. This leads to an entire new and unprecedented market situation and results in sometimes unprecedented legal issues which require swift but thorough assessment, both from a national and cross-border perspective. To provide companies and its directors with some general guidelines in these times of uncertainty, our international Restructuring and Insolvency team has prepared an overview of certain pressing legal issues.

As the nation hunkers down to combat the novel coronavirus (COVID-19), bankruptcy courts throughout the country have moved quickly to implement procedures to preserve access to the courts while limiting in-person interaction during the crisis. Each court’s specific COVID-19 procedures are different, but they largely prohibit in-person hearings, recognize the need for flexibility and adjournments for non-emergent matters whenever possible, and encourage the creative use of technology to allow as many matters to go forward as scheduled, including evidentiary hearings.