As COVID-19 related economic disruptions place unprecedented stress on cash flows, the risk of insolvency is a new and growing concern for many businesses. Against the backdrop of a decades-long growth in corporate debt, boards of directors are making decisions that have the potential for pitting the interests of creditors against the interests of equity shareholders.
The Carluccio’s judgment provides some much-needed clarity on the interrelation of the Furlough Scheme and the requirements of insolvency legislation. It is to be commended for its clarity and for the fact that it had to construe the workings of the Furlough Scheme in the absence of any statutory guidance as to its implementation. It is to be hoped that, when the Government comes to enact the necessary legislative measures (including perhaps amendments to Schedule B1 and IR 2016), that it does so with this judgment very firmly in mind.
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.
Introduction
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.
While in previous weeks the winding up petition list has been adjourned for a minimum of three months, this week’s list was successfully conducted by Skype. This article discusses how the hearings worked.
On March 27, Minnesota Gov. Tim Walz clarified that Executive Order 20-20, which directed Minnesota residents to stay at home, applies to debt collection professionals. Due to ongoing coronavirus (“COVID-19”) concerns, Executive Order 20-20, which will remain in effect until April 10, 2020, orders all persons living in the State of Minnesota to stay at home except to engage in exempted activities and critical sector work.
As most businesses, landlords and property solicitors will now know, s.82 of the Coronavirus Act 2020 (“CA 2020”) means there can be no forfeiture for non-payment of rent until July 2020, possibly later (“the relevant period”). But forfeiture has never been the only option open to a landlord whose tenant isn’t paying rent. The government lockdown was announced just two days before the March quarter day, with the inevitable consequence that many businesses did not pay the March quarter day rent.
In these unusual times, Hardwicke is open for business as usual and here to help you and your clients with the multiple issues that may arise out of the current economic conditions. This information update is to help keep you up to date with developments and to share our insight in response to the developments our country is going through at this unprecedented time.
We will be providing regular information to keep you up to date. This update covers:
Although the position is fast-moving and guidance is expected to be given in due course by the Law Society, it is presently understood that remote video conferencing technology such as Skype or Zoom could be used by a practising solicitor to administer a statutory declaration.