Click here to watch the video.
On Friday 24 April, RPC hosted a 30 minute webinar on the interaction of furloughing and insolvency law.
During this session, our Insolvency Partner Paul Bagon discussed the recent High Court judgement involving Italian restaurant chain Carluccio's, which entered administration at the end of March.
When the Coronavirus Act 2020 (the "Act") received royal assent on 25 March 2020, commercial tenants across the country were afforded some relief.
On 28 March 2020 the Business Secretary announced further new far-reaching measures to help businesses combat the financial impact of COVID-19.
In a welcome intervention, the Business Secretary declared it was the government’s intention to suspend wrongful trading provisions and to introduce a moratorium for businesses undergoing a restructuring process. Both measures are intended to assist companies to trade through financial distress caused by the loss of business due to the COVID-19 pandemic.
Concerns regarding the strength of UK supply chains and the consequences which arise when links in the chain fail, are not new and were recently subject to significant scrutiny in the context of Brexit negotiations. But with COVID-19 causing a host of new problems for already stressed supply chains, what can businesses do to protect themselves?
Lawyers have called for a break on winding-up petitions against retailers as they fail to pay creditors due to the outbreak. So far, retailers have been hit with 52 winding-up petitions since the beginning of the year, with the numbers accelerating since the coronavirus outbreak took hold, according to lawyers at RPC.
Such a move would give retailers breathing space as they try to mitigate the impact of coronavirus, but it would also hurt creditors including small suppliers.
The Government has launched a number of initiatives to assist companies and businesses to trade through the current financial stress. But what should directors still be aware of as they steer their organisations through these unprecedent times?
As the impact of COVID-19 is felt across the globe, many airlines have grounded their fleet, ceased operating flights, and are potentially in breach of any financial covenants that they may have in their debt or lease documents, if not already in technical insolvency.
If an airline does go into insolvency, what should banks and lessors do to protect their assets? What issues, practical and legal, should they be aware of?
The Warning Signs
As American individuals, employers, and governments are implementing various restrictions from social distancing to quarantines to reduce the rate of new COVID-19 infections, each of these decisions results in an increasingly negative impact on the American economy. Even with the recent financial aid package passed by Congress, with greater credit constraints and a heightened sensitivity to weak consumer demand, small businesses are among those hit the hardest by COVID-19 restrictions.
COVID-19: On 28 March 2020 the Business Secretary announced further new far-reaching measures to help businesses combat the financial impact of COVID-19. What it the likely impact of the suspension of wrongful trading provisions and a moratorium for businesses in restructuring on your business?
Representatives of a lender on a board will not automatically impose directors' duties on the lender, but they may apply where a director's specific instructions have led directly to a breach of fiduciary duty. The High Court recently explored this issue in an appeal in the case of Standish v Royal Bank of Scotland plc.(1)
Facts