The German federal government is currently preparing new legislation to reduce the economic fallout from the COVID-19 pandemic. This news alert deals with the proposed changes to the insolvency and restructuring related German regulations.
In an unprecedented move the Federal Government has announced temporary changes to some aspects of existing insolvency laws as part of the plan to try and keep businesses operating during this unique health crisis time.
Insolvent Trading
“In this world nothing can be said to be certain, except death and taxes.” - Benjamin Franklin
Summary and Key Takeaways
Insolvency in the construction industry is not just isolated to contractors, sub-contractors and consultants. Industry and economic pressures can affect all parties, including at times employers, therefore it is equally important for contractors to carry out due diligence when bidding for projects and to consider contractual mechanisms that can be put in place to protect against non-payment by the employer and insolvency risks.
Wrongful trading rules, which can result in directors being personally liable for losses incurred as a result of continued trading, are being temporarily suspended in recognition of the large number of businesses being impacted by COVID-19. While this news will be welcomed by businesses across the UK, directors should not be complacent about their responsibilities.
For many years an insolvent company’s creditors have had their cake and eaten it where a gratuitous alienation for inadequate consideration has been successfully challenged.
Back in the late 1990’s the ubiquitous Katie Price t/a Jordan was at the height of her fame, gracing the pages of our tabloids, gentlemen’s publications such as Loaded and FHM and perhaps the odd bedroom wall of a rather poor Law student. It was reported at the time she had a net worth of around £45million.
In December 2018 with her finances now somewhat diminished, Katie entered into an Individual Voluntary Arrangement (“IVA”) with her creditors. In November this year she was made bankrupt for failing to comply with the same.