The Act is meant to give temporary relief to financially distressed individuals, firms and businesses who are facing challenges imposed by COVID-19 but who are otherwise viable and profitable.
It is unsurprising that many of the Act’s sections expressly refer to the relevant provisions of the personal and corporate insolvency legislation applicable in Singapore. In this regard, it is noteworthy that the Act refers expressly to the Insolvency, Restructuring and Dissolution Act (“IRDA”). This warrants some explanation.
Whilst no further action has, as yet, been taken to implement the foreshadowed changes to insolvency law in England and Wales (see our comments on the same), the Business and Property Courts of England and Wales ("BPC") have moved quickly to release a temporary Practice Direction on insolvency proceedings ("TIPD").
In the midst of the unprecedented global health challenge presented by the spread of the coronavirus (COVID-19), businesses will almost certainly face pervasive disruptions to operations as the economy experiences widespread financial distress. In light of the dramatic and continuing economic downturn, and with the certainty that almost every business sector has been or will be affected, it is imperative that each company have a plan for handling relationships with companies in financial distress.
As the prevalence of COVID-19 continues to grow worldwide, together with the resulting social and business restrictions, the inevitable fallout will be a failure to achieve business plans and an increase in business insolvencies.
The UK Chancellor, Rishi Sunak, stated whilst unveiling recent plans for a £330bn economic boost in light of the pandemic, “this is an economic emergency. Never in peacetime have we faced an economic fight like this one".
Introduction
With the impact of COVID-19 rapidly being felt by businesses, 2020 is likely to see a number of Australian insureds face insolvency. While this presents a number of challenges for (re)insurers in the Australian market, there are steps that (re)insurers can take to manage the situation and their exposures.
On February 19, the Small Business Restructuring Act (SBRA) — the most significant change to the Bankruptcy Code in 15 years — went into effect. The SBRA, also known as Subchapter V of Chapter 11, removed numerous barriers that had long prevented small businesses from reorganizing in bankruptcy. On March 27, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) went a step further and significantly expanded eligibility under Subchapter V by raising the debt limit from $2.7 million to $7.5 million. This overview answers key questions about how these new laws work.
The Secretary of State for Business, Energy and Industrial Strategy, Alok Sharma, has announced that the government will be introducing a number of changes to the insolvency regime in England & Wales as part of its response to the COVID-19 outbreak.
The COVID-19 pandemic has placed immense strain across the whole of the economy and raises the issue of how company directors should balance their obligations to shareholders and creditors while ensuring that they protect themselves from any personal liability.
Companies and their directors in the following sectors of the economy face difficult decisions:
The Ministry of Law in Singapore has announced that it will introduce a bill to the Parliament next week to offer temporary relief to businesses and individuals who are unable to fulfil their contractual obligations because of the COVID- 19 pandemic.
The proposed bill includes: