As courts across the country deal with scaled back operations due to the COVID-19 pandemic, bankruptcy courts in New Jersey and Delaware have issued novel orders to address the impact of the virus on certain debtors. Last month, debtors in the chapter 11 bankruptcy cases of Modell’s Sporting Goods, Inc. and CraftWorks Parent, LLC each sought and obtained court orders suspending certain case activity which, for all intents and purposes “mothballed” the cases for a certain period of time.

Faced with constantly evolving circumstances in these challenging times, officers and directors should not lose sight of what is arguably their most important corporate role–that is, as a fiduciary. The question, particularly as a corporation’s financial situation changes and restructuring is being considered, is: Who is that fiduciary duty owed to? Unfortunately, the answer depends on whether the corporation is insolvent or near insolvent, which is why being vigilant now will help avoid scrutiny by creditors later.

O Conselho Nacional de Justiça (“CNJ”) aprovou, na 307ª Sessão Ordinária, realizada de forma virtual no dia 31 de março de 2020, orientações para os juízos competentes para processamento de recuperações judiciais, diante do estado de calamidade pública e severo impacto econômico gerados pelo COVID-19.

As orientações foram aprovadas pelo CNJ por meio do Ato Normativo nº 0002561-26.2020.2.00.0000, sob relatoria do Conselheiro Relator Henrique Ávila.

In the current period of flux, lenders should review their finance documents regarding protections and/or vulnerabilities; and where exposed to industries particularly affected by the COVID-19 outbreak may consider (i) invoking provisions to demand early repayment and/or to preclude further lending; and (ii) whether there is material benefit in doing so. They should also consider pre-emptive steps with a view to staving off critical defaults.

When Financial Stress Turns to Distress–Restructuring Tools to Avoid Disaster

Parts 1 and 2: Chapter 11 Checklist and What Else Is in the Toolbox

Introduction

A recent decision from the United States District Court for the Southern District of New York (the District Court) in the bankruptcy cases of Sears Holdings Corp. may loom large in a day and age when shopping mall operators are seeking creative alternatives to the traditional, retail-oriented anchor-store business model.

On March 28, 2020^[1], the UK Government announced that it will introduce new legislation extending the UK’s existing restructuring and insolvency laws to include:

A pandemia acarretada pelo Covid-19 impactou severamente a atividade econômica, diante da necessidade de adoção de medidas cada vez mais restritivas com o objetivo de diminuir a curva de propagação do coronavírus.

O impacto econômico está sendo sentido por diversos setores da economia, sendo que a mudança abrupta no cenário financeiro surpreendeu o mercado como um todo e tem tornado cada vez mais difícil o cumprimento de obrigações pelas partes contratantes.

With unanimous vote, the German Parliament passed the Law to mitigate the consequences of the COVID-19 pandemic in civil, criminal and insolvency law. This new law brings with it several (temporary) changes of law all of which aim at mitigating the consequences of the COVID-19 pandemic in both private and business life. Inter alia, the following provisions have been implemented:

1. Suspension of the obligation to file for insolvency

The below chart summarizes the modifications to certain protocol and procedures of major US Bankruptcy Courts in light of the recent COVID-19 outbreak. At the moment, the chart includes the US Bankruptcy Courts for the District of Delaware, the Southern District of New York, the Northern District of Illinois, the Eastern District of Virginia, and the Southern District of Texas. Mayer Brown will continue to monitor the situation in the days and weeks to come, and will update the chart accordingly.

BANKRUPTCY COURT

STATUS

ACCESS & ENTRY RESTRICTIONS