This note sets out the circumstances in which a creditor may successfully lift a statutory moratorium against a company in administration in England and Wales, and in Singapore.
English law
“Bankruptcy is about financial death and financial rebirth. Bankruptcy is the great American story rewritten. We’re a nation of debtors.” -Elizabeth Warren
Amid the Coronavirus (COVID-19) pandemic and related economic turmoil, bankruptcy filings in the United States are on the rise. Non-US insurers should review contractual arrangements with US insureds and brokers, and establish a plan to deal with bankruptcy filings across the United States in a consistent fashion.
The extraordinary pandemic-based financial challenges impacting hospitals, health systems and other providers as a result of the Coronavirus (COVID-19) should prompt boards to re-evaluate focus on their duty to monitor the organization’s financial condition. Existing case law provides useful direction on the scope of these duties, particularly during periods of financial distress. There is value to enhancing the engagement of the board’s finance (or similar) committee on solvency matters during this period of crisis.
United Cannabis Corp. entered into chapter 11 several days ago in an effort to stop various patent infringement claims being lodged against it. Most bankruptcy courts have said that use of the federal bankruptcy laws by companies in the cannabis space is a no go because even if the companies are in compliance with applicable state laws, they are operating in violation of federal law. United Cannabis Corp. mostly deals in hemp based products, the production and sale of which do not violate the Controlled Substances Act.
Business Secretary Alok Sharma has announced that the government will be introducing measures to “improve the legal options for companies running into major difficulties. The overriding objective is to help UK companies, which need to undergo a financial rescue or restructuring process, to keep trading. These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends”.1
The temporary amendments to the insolvency laws which are being considered include:
Der Gesetzesentwurf sieht Regelungen zu Aussetzung der Insolvenzantragspflicht, Zahlungsverboten, neuen Darlehen und Sicherheiten sowie zur Insolvenzanfechtbarkeit vor:
1. Insolvenzantragspflicht
The draft bill provides regulations regarding the suspension of the obligation to file for insolvency, payment prohibitions for management, new loans and securities, as well as claw-back risks:
1. Obligation to File for Insolvency
According to the ministry, the draft bill has been prepared, and a first reading in the Bundestag is scheduled for March 25, 2020. It is expected that the law will come into force this month. According to the aforementioned press release, the temporary suspension of the obligation to file for insolvency will be subject to the following conditions:
Nach Informationen aus dem Ministerium werde derzeit am Gesetzesentwurf gearbeitet und eine erste Lesung im Bundestag sei für den 25.03.2020 geplant. Man gehe davon aus, dass das Gesetz noch in diesem Monat in Kraft treten werde.
Nach der Pressemitteilung vom 16.03.2020 soll die temporäre Aussetzung der Insolvenzantragspflicht an folgende Voraussetzungen geknüpft sein: