Slimming down a company, corporate and financial restructuring will be on minds of many managers and company owners in the coming months.

In practice, when deciding to wind down a company, often a decision needs to be made whether to trigger a regular wind-down (likvidacija), a fast-track wind-down (prenehanje družbe po skrajšanem postopku) or a bankruptcy proceeding (stečaj). The main goal usually is to close down the company with less cost and no liability for the shareholder or the management.

1. What to address first

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.

All insolvency proceedings (bankruptcy, and compulsory settlement) and court-sponsored financial restructurings (preventivna prestrukturiranja) in Slovenia are on hold until the recall of the COVID-19 epidemic (proceedings are currently expected to be on hold until 1 July 2020) (the "Recall"). During this time courts will not conduct the above-mentioned proceedings and no procedural and material deadlines will run.

Enacted March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) places short-term obligations and restrictions on lenders and servicers of federally backed loans. As part of these limitations due to Coronavirus Disease 2019 (COVID-19), lenders and servicers are temporarily subject to moratoriums on foreclosures, mandatory forbearance obligations, and revised credit reporting obligations.

Barely any region, sector or business remains unaffected by the exponentially growing pandemic. Stock market values, and thus also valuations for private companies, are plummeting due to the existing uncertainties.

Against this background, the question arises of how to deal with signed share or asset purchase agreements, if closing is still imminent. From the buyer's point of view, a valuation from the time before the COVID 19 crisis may now appear very expensive. The pandemic may trigger not only contractual provisions but also various legal remedies.

During the Global Financial Crisis, borrowers who needed to refinance their maturing debts faced difficulty. Lenders had neither the appetite nor the ability to lend, save in limited circumstances. The income generated by commercial real estate assets often did not change, however.

On 28 March, UK Business Secretary Alok Sharma announced that the rules relating to ‘wrongful trading’ will be suspended on account of the issues that Coronavirus Disease 2019 (COVID-19) presents.

Both the COVID-19 pandemic and the measures taken by governments have led to unprecedented legal questions that require immediate attention and solutions. These are challenging times. We have therefore prepared the following overview of some of the pertinent legal questions and the answers to consider, in the hope they provide useful preliminary guidance.

This week the Slovenian Government sent a new law - the first big anti-corona law package - the Intervention Measures to Mitigate the Effects of the coronavirus (COVID-19) Infectious Disease Epidemic on Citizens and the Economy Act into the legislative procedure.

On 23 March 2020, the German Federal Cabinet adopted further urgent measures to mitigate the economic consequences of the COVID-19 pandemic. The package of measures includes an emergency aid programme for micro-enterprises, self-employed persons and freelancers of up to EUR 50 billion and an economic stabilisation fund of EUR 600 billion as well as a Law to mitigate the consequences of the COVID-19 pandemic in civil law, insolvency law and criminal proceedings.