In practice, it is not uncommon for bankruptcy debtors to file suit against creditors or debt collectors for stay and discharge injunction violations. Often, they will do so before making any meaningful attempt to communicate with the creditor or debt collector to request that they stop their improper collection efforts.

Government intervention in the commercial letting market, in response to COVID-19, has continued with the Corporate Insolvency and Governance Act 2020 becoming law on 25 June.

We have updated our June briefing on remedies for unpaid rent to reflect the recent legislative changes, including the extension of the temporary prohibition on forfeiture.

The Act makes significant permanent reforms to our restructuring and insolvency regime and also contains temporary measures designed to mitigate some of the economic and practical challenges of COVID-19. In this update we provide a brief overview of the key restructuring and insolvency measures introduced by the Act.

Generational Insolvency Reform restricts ispo facto provisions and pre-existing termination rights

The new Corporate Insolvency and Governance Bill contains a mixture of temporary measures necessitated by the immediate economic and practical challenges of COVID-19, and longer-term reforms to our restructuring and insolvency regime.

In the very unusual period in which we find ourselves today, it seems to be common wisdom that an avalanche of commercial loan defaults is coming. As such, it is a good time to take a fresh look at the terms and provisions used in commercial workout documents, whether in a simple agreement that extends a maturity date or in a complex forbearance document that restructures the collateral arrangement and financial covenants.

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COVID-19 Webinar Series

On April 24, 2020, the Paycheck Protection Program and Health Care Enhancement Act was signed into law and provided an additional $310 billion for the Paycheck Protection Program (PPP). The Small Business Administration (SBA) resumed accepting PPP loan applications on April 27, 2020. In light of the quick exhaustion of initial PPP loan funds, eligible businesses should apply for PPP loans soon to increase the likelihood of receiving available funds.

The SBA has also provided additional guidance for entities applying for loans.

Current market uncertainties related to the Covid-19 pandemic will lead to the insolvency of a number of companies, some of which may feature in your supply chain. It is a timely reminder that when entering into future strategic commercial arrangements with key suppliers (or as part of renegotiating existing ones), how you address the risk of supplier insolvency will be critical. We have prepared a short briefing identifying some of the key considerations and practical remedies (aside from termination) that can help mitigate this risk.

Contacts

Small businesses often struggle to reorganize in bankruptcy. To address this issue, Congress passed the Small Business Reorganization Act of 2019 (the SBRA). The SBRA took effect in February 2020 and makes small business bankruptcies faster and less expensive.