Analysts expect that GDP will plummet as a consequence of the restrictions on economic activities imposed as a consequence of the COVID-19 pandemic, and that the global economy, and with it the Czech economy, will slow down considerably. Various entities from across numerous industries are facing, or may soon face, an immediate liquidity shortfall.
On Friday March 27, 2020, President Trump signed into law the third major piece of coronavirus-related legislation in the last several weeks – the Coronavirus Aid, Relief, and Economic Security Act (CARES). The new law contains several amendments to the Bankruptcy Code.
The economic shock and disruption caused by the outbreak of the SARS-CoV-2-Virus (COVID-19-pandemic) resulted in unprecedented circumstances for companies and prompted recent emergency rescue measures by the German legislator. In the following, we are highlighting two major legislative measures that will come into force in the next few days.
Legislative changes to mitigate the consequences of the COVID-19-pandemic with respect to specific contract, corporate, insolvency and criminal law matters (the “COVInsAG”)
Bankruptcy & Creditors’ Rights Alert
Small businesses often struggle to reorganize in bankruptcy. To address this issue, Congress passed the Small Business Reorganization Act of 2019. The act took effect in February 2020 and makes small business bankruptcies faster and less expensive. At the time of enactment, the act only applied to business debtors with secured and unsecured debts less than $2,725,625.
On Friday, March 27, 2020, the U.S. House of Representatives voted to approve the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) submitted by the Senate and President Trump just signed the bill. The bill provides for $2.2 trillion in emergency aid to ease the financial impact of the COVID-19 crisis.
The brick-and-mortar retail industry has been in a state of flux since online retailers such as Amazon started business in the mid-‘90s. Recent years have been particularly difficult for retailers: in 2018, retailers represented 5 of the 10 largest Chapter 11 bankruptcies. The pace of retail bankruptcies showed no signs of slowing in 2019, with retailers such as Payless Holding LLC, Forever 21, Gymboree, Z Gallerie, and many others all filing Chapter 11 petitions.
Last Friday, in response to the outbreak of the coronavirus pandemic (COVID-19), the German government announced various measures described as a big "bazooka" to avert a crisis in the Eurozone's largest economy. The German development bank KfW will play a key role in the context of the announced measures and has been tasked to provide liquidity assistance to German companies hit by the pandemic.
The CFPB announced that it settled with Think Finance, LLC and six subsidiaries on February 5.
HEADLINES
- Default levels remain historically low at 1 per cent to 2 per cent
- Prevalence of cov-lite loans in Europe may be concealing some underperformance, but there are no conventional triggers for lenders to act
Despite concerns that the economic cycle is peaking, and the impact of geopolitical and trade volatility on corporate earnings, leveraged finance default rates show little sign of rising during the next 12 months.
In a unanimous opinion released last week, the Supreme Court provided guidance as to how to determine the finality of an order in a bankruptcy case for purposes of an appeal under 28 U.S.C. § 158(a). The Court held that the adjudication of a creditor’s motion for relief from stay is properly considered a discrete and independent proceeding within a bankruptcy case and is immediately appealable.