The year 2020 is drawing to an end and the construction industry is gearing up for what is typically referred to as the builders break over the December holidays. A lot of construction companies will find the 2020 builder’s break to be very different to those of previous years, due to the negative impact that the COVID-19 pandemic has had on the construction industry, and the world at large.

Each year amendments are made to the rules that govern how bankruptcy cases are managed — the Federal Rules of Bankruptcy Procedure. The amendments address issues identified by an Advisory Committee made up of federal judges, bankruptcy attorneys, and others. The rule amendments are ultimately adopted by the U.S. Supreme Court and technically subject to Congressional disapproval.

In the wake of the COVID-19 pandemic, more and more businesses are finding themselves in distress. According to Forbes, 30 million small businesses across the United States are experiencing financial distress, with half of those blaming the global pandemic for revenue decline. These challenges are especially felt by small businesses who may have limited access to the financial markets and investors as compared to larger companies, both public and private, and especially those whose owners have made personal guarantees on business loans.

On May 8, 2020, the Supreme Court of Canada (the "SCC") released its reasons for the ruling rendered on January 23, 2020, which allowed the appeal by 9354-9186 Québec Inc. and 9354-9178 Québec Inc. (collectively, "Bluberi")^[1]. The SCC's ruling set aside the Québec Court of Appeal's (the "Court of Appeal") ruling, thereby restoring the first instance judgment of the Superior Court of Québec ("Superior Court").

On 21 April 2020, just over a week before the anticipated end of the South African national lockdown, President Cyril Ramaphosa announced further economic and social relief measures in response to the COVID-19 epidemic. This comes at a time when South Africa teeters towards a food and humanitarian crisis of “biblical proportions”.

In response to the COVID-19 virus, Canada’s federal government has restricted non-essential travel and closed the US border. Canada’s provincial governments have enacted highly restrictive measures including mandating the closure of facilities providing recreational programs (i.e. gyms), libraries, public and private schools, licensed childcare centres, bars and restaurants, theaters, cinemas and concert venues, and the list goes on. Some provinces have also banned gatherings of more than 5 people and prohibited all non-essential businesses.

On March 17, 2020, the Court of Appeal of Québec (the "Court") issued an important ruling concerning "pre-post" compensation and "non-dischargeable" debts under the Companies' Creditors Arrangement Act (the "CCAA"), by finding that the debt of a municipality arising from an agreement entered into as part of a voluntary reimbursement program ("VRP") under the Act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts ("Bill 26") is unsecured debt in connection with the insolvency of a co-contra

The COVID-19 pandemic has caused unprecedented economic disruption, creating sudden financial distress across industries. Companies are now facing impacts ranging from a dramatic decline in revenue of uncertain duration, to potential setbacks to M&A transactions, to delayed or canceled financing rounds.

With even some previously well-performing companies potentially entering the so-called zone of insolvency, it’s important to review the fiduciary duties owed by directors and officers and how discharging those duties may change in the face of financial distress.

Somewhere close to Sandton – Africa’s richest square mile – lies the suburb of Parkmore in the Gauteng Province. This is the principal place of business of a debtor that cannot pay its debts, and is facing the barrel of an application for its winding-up. The debtor’s registered address is in Mbombela within the province of Mpumalanga – close to Africa’s Big Five game. Two court options come into play.

South African state-owned enterprises (SOEs) are coming under tremendous pressure to do something to extricate themselves from their financial woes. Any kind of bankruptcy event cannot be the answer: because of the obvious cross-default impact such a declaration will have on various debt and other instruments in the capital markets. It will also be catastrophic to the Government’s standing and rating in the financial markets.