COVID-19 is an unexpected shock for many businesses. Some businesses are being significantly affected, particularly those in the travel and hospitality sectors. We consider some of the options open to otherwise good businesses facing cash-flow and other financial issues as a result of COVID-19.

How are governments dealing with COVID-19

A party who believes that a bankruptcy court erred in either granting or denying relief from the automatic stay needs to act fast to appeal such a decision. In the recently decided case of Ritzen Group, Inc. v. Jackson Masonry, LLC, the U.S. Supreme Court held that: “[A]djudication of a motion for relief from the automatic stay forms a discrete procedural unit within the embracive bankruptcy case” which “yields a final, appealable order when the bankruptcy court unreservedly grants or denies relief.”

We consider one case illustrating the efficiency of international insolvency proceedings commenced in Ireland, improvements to the efficiency of the appellate courts and one imminent legislative change, which will impose an administrative burden on the holders of security over book debts.

Ireland as an efficient venue for international insolvency

The Personal Insolvency Act 2012 was enacted with the aim of throwing a lifeline to debtors, many of whom may be in arrears on mortgage loans secured against their principal private residence.

On August 23, 2019, the Small Business Reorganization Act of 2019 (the “Act”) was signed into law. The Act, which goes into effect in February of 2020, creates a new Subchapter V under Chapter 11 of the U.S. Bankruptcy Code.

In the past, few small businesses have been able to reorganize under Chapter 11 of the Bankruptcy Code due to the costs and administrative burdens associated with the process.

“To achieve great things, two things are needed: a plan, and not quite enough time.” – Leonard Bernstein

To paraphrase, great things happen when there is a plan and a deadline.

Examinership is one of Ireland’s key rescue processes for insolvent companies. It has been used successfully in very many cases since its introduction almost 20 years ago.

Crucially, it encompasses a deadline with no flexibility.

100 days

Less than an hour after an oxygen tank exploded on Apollo 13, mission control told the crew to isolate a small tank, containing 3.9 pounds of oxygen.^[1] Days later, that tank provided the oxygen to keep the crew alive while landing back on Earth.

If they had left that tank for even another hour the oxygen in it would have been almost gone.

The recent publication of the Courts Service Annual Report 2018 highlighted on-going economic and societal changes by way of hard data. In his Foreword to the Report, Chief Justice Frank Clarke references our digital age, noting that “people are used to round-the-clock online access to services”. He adds that the courts “must deal with the twin challenge of facilitating such access while at the same time ensuring that the court process is secure and that cases are allocated the time and consideration they require”.

In bankruptcy, a debtor must relinquish assets to satisfy debts. But there are exceptions to this general rule. Certain assets may be exempted from a debtor’s bankruptcy under federal and state law. Other assets, which are subject to a contractual loan agreement and the security interest of a lender, may be “reaffirmed” by a debtor pursuant to a reaffirmation agreement.

The default setting for the hearing of many contested debt recovery and security enforcement cases is by way of affidavit evidence, particularly in the High Court[1]. The creditor swears an affidavit setting out the reasons why it maintains the court should rule in its favour. Certain documents can be presented as exhibits that back up its case such as a contract.