Potentially casting retail landlords against their debtor-tenants, a bankruptcy judge in the Eastern District of Virginia--an increasingly popular destination for major retail bankruptcy filings--allowed Pier 1 and its affiliates to effectively "shelter in place" while the majority of its stores remain closed across the country.
The news of major retailers, gyms and others filing or expecting to file for bankruptcy protection is yet another unfortunate reality of the COVID-19 pandemic crisis. A corporate bankruptcy can lead to a host of insurance-related issues, including claims made against directors and officers, competition for finite insurance limits, and disputes over who has rights or priority to, and can access, insurance policy proceeds.
In the light of increased volatility across many markets and disruptions to economic activity, parties to transactions that are subject to ISDA Master Agreements1 will need to think about what strategies they would adopt if an Event of Default occurs with respect to their counterparties.
Choices
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
These are unprecedented and uncertain times. Everywhere, the COVID-19 pandemic has strained revenue streams and asset prices, shaken investor and consumer confidence, and caused overall financial conditions to deteriorate. Everyone is asking the same question: How do we deal with the financial fallout of COVID-19?
In many cases, parties are working together to overcome these financial challenges, preserve value and navigate a mutually beneficial path forward.
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:
Having ensured, to the extent possible, the safety of their workplace and workforce, many companies are turning their mind to the economic impact of the COVID-19 pandemic. All businesses are impacted, and in many cases, the impact will be adverse, whether caused by travel restrictions, office or workforce disruptions or decreased demand.
In such turbulent times, financial institutions and their customers or borrowers may be facing significant challenges and stresses. There are signs suggesting that clients are facing financial distress and would benefit from assessing restructuring options, or that it would be time to consult with your intervention or special loans group.
On January 23, 2020, the Supreme Court of Canada unanimously allowed the appeal from the Québec Court of Appeal’s decision in 9354-9186 Québec Inc. et al. v. Callidus Capital Corporation, et al., opening the doors to third-party litigation funding in insolvency proceedings in Canada.
Background