Retail tenants are experiencing unprecedented difficulties stemming from the COVID-19 pandemic, including government shutdown orders for non-essential businesses and shelter-in-place rules that have virtually stopped all in-person shopping. Even as these restrictions are finally being relaxed to a limited degree, the dramatic effects of the pandemic will long be felt in the retail industry.
In these unprecedented times, all businesses will be facing issues they have never encountered before. The disruption caused by the measures imposed to combat the COVID-19 outbreak are significant and wide-reaching, impacting every business and its suppliers, customers, workforce, investors and lenders.
As a result of the current situation, we are advising clients who find themselves operating in the shadow of potential bankruptcies along the supply chain, in their customer base and their trading partners globally. Based on deep workout experience after past world crises, we can help clients to find and employ business strategies to minimize business disruption, salvage relationships and restructure financial facilities and business structures to facilitate ongoing trading .
Issues arising:
Three recent court decisions address the scope and limits of bankruptcy injunctions barring future asbestos claims. The decisions – from the Second Circuit Court of Appeals, a Maryland bankruptcy court, and the Montana Supreme Court – underscore that (i) broad notice of proposed injunctions is critical and (ii) channeling injunctions under § 524(g) of the Bankruptcy Code apply only to liabilities that are derivative of the debtor’s liabilities, not to a company’s own liabilities.
In these unprecedented times, the U.K. government is seeking to preserve U.K. businesses and has already introduced significant measures to achieve that aim, including:
Directors will soon be free to make decisions to trade on even insolvent entities, and incur debts in the ordinary course of business, with the passing of the Coronavirus Economic Response Package Omnibus Act 2020 last night and Royal Assent today. The Act is intended to encourage business to continue trading free of risk that insolvent trading laws – which prevent directors of insolvent companies incurring fresh debt – would impose a personal civil and criminal liability on them. There are also changes to statutory demands and debtor's petitions.
ASIC is becoming more serious and more active and will take action against directors if there is su cient reason to, so insolvency practitioners should consider all possible actions/recoveries fully in any report to ASIC.
A company's financial distress presents a challenge for its directors and officers of large and complex financial services companies and can raise a range of difficult issues, including potential liability for insolvent trading, which potentially exposes directors both to civil and criminal consequences under the Corporations Act 2001(Cth).
States across the country have enacted so-called “reviver” statutes allowing otherwise time-barred claims for childhood sexual abuse to proceed. The statutes vary by jurisdiction, but generally do one of three things: (1) eliminate the statute of limitations for such claims; (2) extend the statute of limitations for such claims; or (3) create a window (e.g., a period of a few years) in which otherwise time-barred claims can be filed.
Only two asbestos bankruptcy cases were filed in 2019 – the lowest number in any one year since Congress enacted the special asbestos bankruptcy trust/channeling injunction statute, Section 524(g) of the Bankruptcy Code.
The Act of February 13, 1998 (the Renault Act) sets out the rules and procedure all employers from the private sector need to follow in case of restructuring. The rules have not been modified since the Act’s adoption (which was largely prompted by the closing of the Renault factory in 1997, causing the redundancy of 3,100 employees).
More than 20 years have passed. An update is due.