The coronavirus pandemic has made life complicated for almost all businesses, especially from the financial point of view. Businesses thus face an increased risk of bankruptcy and subsequent insolvency proceedings.
To help with this challenging situation, an amendment to the Insolvency Act as part of the "Lex Covid" was adopted. Lex Covid became effective on 24 April 2020.
Initiation of insolvency proceedings
Creditor's right to file an insolvency petition
In the context of the COVID-19 pandemic, many measures have already been taken to support the economy as much as possible during these turbulent times. It is already clear that the impact will be enormous and that the cash buffer built up by some companies will not be enough to survive this crisis. Measures such as deferrals on paying tax and social debts, temporary unemployment due to economic reasons and the Belgian State’s guarantee scheme for bank loans will not suffice for some.
Introduction
On 23 April 2020 the Croatian Government adopted a Proposal for an Act on Intervention Measures in Enforcement and Insolvency Proceedings During Special Circumstances (the "Draft Intervention Act"). The Draft Intervention Act states that its purpose is to alleviate the position of citizens subject to the enforcement proceedings, to help companies which may be facing bankruptcy during the special circumstances, as well as to help the recipients of national and/or EU grants and recipients of the governmental aid due during the special circumstances.
With the fourth law on COVID-19, the Austrian legislator has suspended the obligation of an overindebted debtor to file for insolvency until 30 June 2020, irrespective of the cause of the over-indebtedness. Some other countries in the CEE region have also adopted measures to combat the consequences of COVID-19 as detailed in the following overview:
Die COVID-19-Pandemie und deren wirtschaftliche Auswirkungen führten bisher zu insgesamt fünf umfassenden COVID-19 Gesetzespaketen. Darunter finden sich ua Änderungen im Insolvenz-, Anfechtungs- und Eigenkapitalersatzrecht, mit denen die wirtschaftlichen Auswirkungen der COVID-19-Pandemie adressiert werden sollen. Ein erster Schritt in die richtige Richtung, weitere insolvenzrechtliche Anpassungen werden aber folgen müssen. Im Folgenden wird ein Überblick über die wesentlichen insolvenzrechtlichen Änderungen gegeben.
Verlängerte Insolvenzantragsfrist
Bulgaria has been in a state of emergency since 13 March due to the COVID-19 outbreak. On 23 March the Parliament voted on a special State of Emergency Act (COVID-19 Act) which suspended all court, arbitration and enforcement terms and proceedings during the state of emergency, currently in force until 13 April.
On 14 March 2020, the Croatian Ministry of Justice issued recommendations to prevent the transmission of the novel coronavirus (COVID-19) and control the pandemic ("Measures"). The Measures are applicable until 1 April 2020. The Measures advise temporary adjustments to legal requirements in civil, insolvency and criminal procedure law to avoid hardship that would otherwise arise as a result of the coronavirus crisis.
With the aim of further mitigating the negative effects of the crisis on companies and private individuals, the Measures advise the following:
Thomas Cook Belgium and Brussels Airlines may escape fines from the Belgian Competition Authority (BCA) notwithstanding the conclusion of an agreement providing for anticompetitive practices according to the Investigation and Prosecution Service of the Authority.
In August 2017, the BCA had opened an investigation into potential anticompetitive practices resulting from the conclusion of a "Commercial Service Agreement" between Thomas Cook Belgium and Brussels Airlines.
Shareholders of Austrian limited liability companies usually want to have influence over whom they are associated with. That's why shareholders often agree on a pre-emptive right (Aufgriffsrecht) to purchase existing shares in certain cases, e.g. in case of insolvency proceedings against a shareholder. However, according to the recent case law of the Regional Court of Linz on limited liability companies, pre-emptive rights to purchase the shares of an insolvent shareholder are invalid and unenforceable.
Know your co-shareholders
On 14 October 2019, the European Commission (“Commission”) approved the German rescue aid to charter airline Condor under the EU State Aid rules.
Condor is going through a difficult financial situation following the entry into liquidation of the Thomas Cook Group, its parent company. The charter airline is currently facing an acute liquidity shortage but also a loss of important claims against other member companies that it will not be able to collect.