Since the beginning of the COVID-19 crisis, concerns have been raised by directors and bodies representing directors regarding potential liabilities directors may face by allowing businesses to continue to trade where there is a risk of insolvency.
In particular many directors are becoming increasingly concerned of the risks of personal liability being imposed on them if they allow their insolvent business to continue to trade in the anticipation that it will trade itself out of difficulty when the current COVID-19 crisis is behind us.
While the full extent of COVID-19's effect on the economy remains to be seen, the pandemic will likely create significant restructuring activity for companies already experiencing financial distress and otherwise healthy companies distressed by the pandemic. We have already seen an increase in Chapter 11 filings, and more will follow.
The sometimes controversial Examinership process, established in 1990, remains a very important tool for Irish companies with viable businesses that find themselves in financial difficulties.
It was established with the intention of preserving employment and benefiting the economy by facilitating corporate recovery. Examinership enables companies that successfully come through the process to do so with new investment and, hopefully, a brighter future that might not have otherwise been possible if the company had been forced into receivership or liquidation.
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 distressed by the pandemic. We have already seen an increase in chapter 11 filings, and more will follow.
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.
SJK Wholesale Limited (In Liquidation) v Companies Act 2014 [2020] IEHC 196
Introduction
In a recent decision, the Irish High Court refused to grant a liquidator access to a Google email account.
The court ruled that Irish insolvency law did not permit a court to order Google Ireland to grant the liquidator access to the email account in circumstances where the email account was created in the name of an individual rather than the company itself.