Following the posting of the article I co-wrote with Morayo Fagborun-Bennett on the Recovery of Commercial and Residential Rent Arrears, there have been a couple of developments of note.
In Mexico, all a debtor’s assets are subject to account for the performance of its obligations, except for those assets which, pursuant to law, are inalienable or cannot be attached.1 When a debtor is unable to pay its debts as they become due, it falls into insolvency which is an economic phenomenon with financial, social and legal consequences. When a debtor is unable to pay its debts as they become due, the Mexican legal system provides a mechanism to address the collective satisfaction of the claims with the assets of the debtor.
This article follows the #HardwickeBrew on 28th May 2020 which looked at the Corporate Insolvency & Governance Bill. If you would like to take part in future #HardwickeBrews, please sign up via our Events page.
Introduction
- This note reviews the provisions relating to the moratorium procedure for Great Britain under the draft Corporate Insolvency and Governance Bill (“CIGB”).
CIGB
As businesses experience diminishing revenues, falling stock prices, and other economic hardships resulting from Coronavirus Disease 2019 (COVID-19), some economists project the possibility of an unprecedented number of business bankruptcies. Some of these businesses own brands, and some have entered into relationships, most commonly trademark licenses, under which they allow others to use their brands. What happens to a trademark license when a brand owner becomes insolvent, particularly in the context of a reorganization under Chapter 11?
Re Debenhams Retail Limited (In Administration) [2020] EWCA Civ. 600
On April 20, 2020, Massachusetts Governor Charlie Baker signed legislation suspending evictions of many residential and commercial tenants as well as halting the foreclosure of most residential properties. The new law, Chapter 65 of the Acts of 2020, “An Act providing for a Moratorium on Evictions and Foreclosures During the COVID-19 Emergency,” takes effect immediately and will remain in place until the earlier of August 18, 2020 or 45 days after Governor Baker lifts the Coronavirus Disease 2019 (COVID-19) emergency declaration.
In these unprecedented times there has been much discussion and focus in the property community of the effect of tenants unable to operate their businesses and the risks of widescale insolvencies.
Re Debenhams Retail Limited [2020] EWHC 921 (Ch)
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act), signed into law March 27, 2020, and the Small Business Reorganization Act of 2019 (SBRA), which went into effect Feb. 19, 2020, provide options for small business debtors considering chapter 11 bankruptcy protection. Designed to alleviate costs and create greater efficiencies in the chapter 11 process, the SBRA was modified by the CARES Act to raise the maximum qualifying debt level from approximately $2.7 million to $7.5 million, through March 27, 2021.
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.