As the economic effects of the coronavirus (COVID-19) pandemic continue to be felt, Germany’s protective shield proceeding under Section 270b of the Insolvency Code is a way for companies to restructure under the direction of management.
The UK government on 20 May set out its hotly anticipated Corporate Insolvency and Governance Bill, which, once enacted, will bring into force previously announced insolvency reforms.
We summarise below the main provisions of the bill as it currently stands. Please look out for further LawFlashes on this legislation as it develops over the next few weeks.
Moratorium
The economic outcome from the coronavirus (COVID-19) pandemic is still uncertain but is likely to remain catastrophic in many respects. Of late popular name brands and companies have filed for bankruptcy as stay-at-home orders and social distancing requirements remain largely in effect. Morgan Lewis tax lawyers alert those considering bankruptcy or restructuring to various tax traps that may arise during these processes.
TABLE OF CONTENTS
COVID-19: Summary of Key Issues.................................................................................... 1
In response to the coronavirus (COVID-19) pandemic, Russia has changed its bankruptcy laws to provide for a moratorium on bankruptcies and a freeze on certain transactions. While the situation is dynamic, these amendments are relevant for ongoing or potential transactions in Russia, as well as a party’s ability to enforce pledges and other types of security interests or to seek other remedies against Russian companies.
The Commodity Futures Trading Commission proposed its first comprehensive overhaul of its bankruptcy rules since 1983. The recommended new rules do not substantively change anything but codify many CFTC interpretations and views developed over 40 years and refresh references to means of communication and recordkeeping practices to reflect current norms.
Prepackaged bankruptcies, prearranged bankruptcies, and expedited sales are available options for businesses in need of accelerated restructurings during the coronavirus (COVID-19) pandemic.
While the full extent of COVID-19’s impact on the economy remains to be seen, it will likely create significant restructuring activity for companies already experiencing financial distress and otherwise healthy companies that experience distress caused by the pandemic. We have already seen an increase in Chapter 11 filings, and more will follow.
A number of UK insolvency trade association bodies and professionals are advocating for the use of what is known as a light-touch administration for companies in financial distress as a result of the coronavirus (COVID-19) pandemic.
Light Touch Administration – What Is It?
In response to the coronavirus (COVID-19) pandemic, US bankruptcy courts have granted extraordinary equitable relief in some cases. As government orders enforcing stay-at-home measures have forced many businesses to shutter indefinitely, bankruptcy courts have implemented procedures to allow the ongoing—albeit virtual—administration of bankruptcy cases.
A Roll of the Dice: Mothballing Bankruptcy Cases Under 11 USC § 305(a)
At the Commodity Futures Trading Commission (CFTC) open meeting on April 14, the CFTC unanimously approved proposed amendments to Part 190 of its rules governing bankruptcy proceedings of commodity brokers, including futures commission merchants (FCMs) and derivatives clearing organizations (DCOs). The proposed amendments are intended to comprehensively update Part 190 to reflect current market practices. Among other revisions, the proposed amendments to Part 190 would: