The economic hardships brought about by the COVID-19 pandemic have impacted companies globally, leading many to consider both in-court and out-of-court restructurings. Because this trend will likely continue as the long-term effects of COVID-19 play out, companies with arbitration clauses in their commercial agreements may wish to consider the impact of insolvency on their options for pursuing pending or future arbitrations.
This article discusses some of the main considerations that arise when a party considering arbitration or already engaged in arbitration files for insolvency, or has its counterparty file for insolvency, under German insolvency law.
Since PROMESA was enacted in 2016 to pave the way for a comprehensive restructuring of Puerto Rico’s mounting municipal debt obligations, the U.S. District Court for the District of Puerto Rico (District Court) has become a haven for litigious groups of creditors and other constituencies. Undoubtedly frustrated with the progress and trajectory of the cases of the commonwealth and its subsidiaries, these groups have mounted a number of complex legal attacks to the efficacy and validity of PROMESA. However, the debtors recently secured a significant win in Fin. Oversight & Mgmt. Bd.
The Government of Hungary has proposed an amendment to Act XLIX of 1991 on bankruptcy and liquidation proceedings (Insolvency Act) aiming to modernise the procedural rules of insolvency proceedings, for example by introducing communication via email and video conferences.
Technical reliefs
On 28 May 2020, the Hungarian Government adopted amendments to the laws on company liquidation and forced deletion procedures to cushion the impact of the global coronavirus pandemic on the economy.
1. Changes related to liquidation
Liquidation is initiated when a company is unable to meet its financial obligations and pay off its debt. However, in Hungary, the courts do not apply an actual insolvency test before ordering liquidation but check only whether certain criteria have been met.
WHAT DUTY?
WHAT DOES IT MEAN?
WHEN DOES IT APPLY?
Maintenance of solvency Management of business risks
On 20 May 2020, the U.K. government published the Corporate Insolvency and Governance Bill (the bill), which includes measures designed to help businesses through the COVID-19 pandemic and features important substantive reforms to U.K. restructuring law, whose introduction has been accelerated by the crisis.
COVID-19-Related Measures:
The key temporary measures introduced by the bill are:
Statutory Demands and Winding up Petitions