Having managed to undertake my first piece of business development last Friday by playing golf with a client and a couple of colleagues - all socially distanced of course - I then managed to avoid most of the news at the weekend.
When Monday morning came and I logged on to my home desk I was therefore feeling rather chipper. Sadly the feeling didn't last long as I then read that:
The BEIS press release does not give much more by way of detail. However the notes to the release state:-
- Talk to your contracting partners about any difficulties that have arisen or that you anticipate might arise. Everyone knows that unanticipated issues are going to get in the way of normal business. So address them head on. Pretending that they don't exist isn't going to be of any help to you or your business partners.
- If you are struggling financially take advantage of the government support. Our website provides guidance on how to access that support. Speak to your bank. The risk to banks is significantly mitigated by the government guarantee.
Midlothian Council v Raeburn Drilling and Geotechnical Limited & Others
One area of practice where clarity by the government will be essential is whether directors are going to be held to all the same standards during this crisis as they are in any other recession.
As the coronavirus (COVID-19) pandemic continues to shake global markets, it is likely that more companies will need to restructure to address liquidity constraints, to right-size their balance sheets, or to implement operational restructurings. In addition to a potential surge in restructurings, the spread of COVID-19 is already having pronounced impacts on companies planning or pursuing restructurings, and further market turmoil may cause even broader changes to the restructuring marketplace.
Potential Increase in Restructuring Activity
The U.S. Supreme Court held today in Mission Product Holdings, Inc. v. Tempnology, LLC that a trademark licensee may retain certain rights under a trademark licensing agreement even if the licensor enters bankruptcy and rejects the licensing agreement at issue. Relying on the language of section 365(g) of the Bankruptcy Code, the Supreme Court emphasized that a debtor’s rejection of an executory contract has the “same effect as a breach of that contract outside bankruptcy” and that rejection “cannot rescind rights that the contract previously granted.”
In a recent decision arising out of the Republic Airways bankruptcy, Judge Sean Lane of the United States Bankruptcy Court for the Southern District of New York held that the liquidated damages provisions of certain aircraft leases were improper penalties and, thus, “unenforceable as against public policy” under Article 2A the New York Uniform Commercial Code. In re Republic Airways Holdings Inc., 2019 WL 630336 (Bankr. S.D.N.Y. Feb. 14, 2019).
On February 8, 2019, the United States District Court for the Southern District of Texas, Houston Division, affirmed a Bankruptcy Court order enjoining a claimant from pursuing claims against a debtor’s non-debtor affiliates based upon third-party release and injunction provisions included in the debtor’s confirmed chapter 11 plan. In re CJ Holding Co., 2019 WL 497728 (S.D. Tex. Feb. 8, 2019).
Bankruptcy partner Brian Hermann and counsel Lauren Shumejda co-authored the chapter, “U.S.: New Strategies for Getting Paid: Recent Investment Fund Activity in Chapter 11,” in the 2019 edition of the Global Restructuring Review (GRR) Special Report, “The Restructuring Review of the Americas.”