Introduction
Introduction
It has been more than a month since the announcement of the lock-down in India by the Central Government, and longer in many other parts of the world.
Due to the Covid-19 pandemic, consolidation transactions are likely to increase in India and globally as many businesses may not have the financial wherewithal to survive the crisis and will look to sell out. At the same time, there will be buyers (“Buyer”) who may have enough cash to be deployed in taking over distressed businesses. This article discusses some of the issues which the Buyer should keep in mind while buying distressed assets.
The High Court has dismissed applications to restrain the presentation of winding up petitions for reasons relating to the Covid-19 pandemic.
The Government of India (GOI) announced a nationwide lock down on account of Covid-19 pandemic with effect from 25 March 2020. This has severely disrupted regular business activities across all sectors of the economy in the country. The quarterly newsletter issued by the Insolvency and Bankruptcy Board of India (IBBI) for the quarter October – December 2019, states that as on 31 December 2019, there are approximately 1,961 entities which were undergoing a corporate insolvency resolution process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (Code).
Background
Under the Scheme, furloughed employees, whose services cannot be used due to the current COVID-19 pandemic, will not be permitted to work for their employer during the period of furlough but the employer will be able to apply for a grant from the government to cover the cost of continuing to pay the employees 80% of their salary up to a cap of £2,500 per month.
The Hon’ble High Court of Rajasthan (Rajasthan HC) delivered its judgment in the matter of Ultra Tech Nathdwara Cement Ltd v Union of India through the Joint Secretary, Department of Revenue, Ministry of Finance and Ors D.B. Civil Writ Petition No.
The Goods and Services Tax (GST) Council during its 39th meeting, held on 14 March 2020, decided that a special procedure should be prescribed for corporate debtors undergoing the corporate insolvency resolution process (CIRP) under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC), in order to enable such entities to comply with the provisions of the GST laws.
Companies are now faced with unprecedented challenges presented by the coronavirus pandemic. In this context, company directors will be trying to do everything they can to protect and preserve the business. However, they do still need to remember their legal duties, so as not to expose themselves to the risk of personal liability if their actions go beyond what the law allows.
Practical steps which directors should be taking now, as explained in more detail below include: