Introduction

Introduction

In the second of our series of articles on the much anticipated Corporate Insolvency and Governance Bill (the “Bill”), which will enact various new corporate restructuring tools well as make temporary changes to insolvency law as a result of the coronavirus, we focus on the temporary changes to the law regarding the suspension of liability for directors for wrongful trading during the coronavirus pandemic.

The much anticipated Corporate Insolvency and Governance Bill(the “Bill”), which will enact various new corporate restructuring tools as well as the temporary changes to insolvency law that have been announced by the government since the onset of the COVID-19 pandemic, was finally published on Wednesday 20 May.

View our series of articles summarising the Bill:

The Government has now published the much anticipated Corporate Insolvency and Governance Bill (the “Bill”), which will introduce various new corporate restructuring tools as well as the temporary changes to insolvency law that have been announced by the Government since the onset of the COVID-19 pandemic.

Executive Summary

• New legislation will introduce permanent and temporary reforms to the UK restructuring and insolvency regime
• Permanent reforms: company moratoriums; restructuring plans; the prohibition of insolvency termination clauses in supply contracts
• Temporary reforms: suspension of the director wrongful trading offence; restriction on the service of statutory demands and winding up petitions

Overview

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) established the Paycheck Protection Program (PPP), a lending program for small businesses pursuant to which up to 100 percent of the principal loan amount is forgivable. While the PPP program has been a boon to business struggling in light of the ongoing pandemic, the SBA has sought to limit access by bankrupt borrowers, eliminating a significant number of otherwise eligible businesses and creating significant legal questions and issues.

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.

Two recent cases demonstrate the efficacy of existing restructuring regimes under Irish company law and more particularly that the Courts in Ireland are receptive and efficient in approving and implementing large multi-jurisdictional restructuring schemes.

Ballantyne – Scheme of Arrangement

This week marks another critical juncture in the ongoing fight against the economic challenges presented by the COVID-19 crisis. With the jobs retention scheme portal now open for applications since Monday 20 April 2020, many businesses and employers are hoping to receive funds from HMRC promptly in order to fulfil payroll obligations by month end and ease any immediate cash flow concerns.