The economic fallout of COVID-19 is widespread and immense, and few businesses remain unscathed by fundamental changes to consumer spending. No industry may be more affected than traditional department stores and brick and mortar retailers. Pressures on these businesses are nothing new, and companies across the retail spectrum have worked in recent years, with varying degrees of success, to adapt to the rise of e-commerce and changing consumer preferences.

A government press release issued on 23 April 2020 will be welcomed by commercial tenants up and down the country, particularly those in the retail and leisure industries, but it will not make such welcome reading for landlords.

In the current climate many commercial tenants are having a difficult time and consequently so too are landlords. The government has urged landlords and investors to work collaboratively with high street businesses which have found themselves unable to pay their rent during the COVID-19 pandemic.

Counterparties to swap and repurchase transactions have come under pressure following the financial dislocations caused by the novel coronavirus pandemic in 2020 (“COVID-19”). Falling and illiquid markets may result in margin calls that create immediate liquidity risk and may lead to an event of default if required margin is not posted in accordance with the contract.

Both the German federal government and various German federal states are pushing ahead with packages of measures to mitigate the as-yet-unforeseeable economic consequences of the COVID-19 pandemic.

Overview

In order to mitigate the economic consequences of the COVID-19 pandemic, the legislator passed the COVID-19 Insolvency Suspension Act (COVInsAG; the “Act”), which came into force on 27 March with retroactive effect from 1 March 2020.

On March 27, 2020, President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act, Public Law No. 116-136 (the “CARES Act” or the “Act”), the stimulus package designed to mitigate the widespread economic impacts of the coronavirus (“COVID-19”). The Act includes important temporary modifications [1] to Subchapter V of the Bankruptcy Code (the “Code”), applicable to small -business debtor reorganizations.

Temporary Increase in Debt Limit

It is clear that there are going to be incredible impacts to businesses and companies of all sizes as a result of the COVID-19 pandemic. No business will be immune to the impact of this health epidemic. Across the globe, governments have responded in various ways to change insolvency laws in an attempt to provide assistance to those businesses affected directly or indirectly by COVID-19. Australia is no different and the Federal and State Governments have responded quickly to the crisis.

COVID-19 has had impacts on contracts relating to commercial undertakings (e.g., construction projects), commercial and industrial tenancies, and individual consumer transactions (e.g. bookings for events). Individuals or companies who are unable to meet their obligations may have to pay damages or forfeit deposits. Otherwise stable businesses may be sued and face lengthy litigation or possible insolvency.

On 1 April 2020, the Ministry of Law announced that it intended to introduce the COVID-19 (Temporary Measures) Bill (“Bill”) in Parliament within one week. The Bill aims to provide temporary relief and protection for individuals and companies who are unable to fulfil their contractual obligations because of COVID-19.

Despite what seemed like three months ago to be something only happening a very long way away, and would hopefully dissipate as quickly as it started, the Coronavirus pandemic has well and truly arrived on our shores.

Daily news reports are revealing the far-reaching effects of the outbreak, the likes of which have not been seen for generations. In what form, and to what extent, the health, financial and social implications will be in the aftermath of the pandemic remain an unknown quantity for us all.

On March 25, 2020, the German Bundestag passed the “Act on Mitigation of the Consequences of the COVID-19 Pandemic in Civil, Insolvency and Criminal Proceedings” (“Act”) as part of the so-called “Corona Package.” The Act passed the German Federal States’ Assembly (“Bundesrat”) in a special session on March 27, 2020, and came into force on the same day.