The Hungarian government issued a decree that amends certain provisions of the bank's liquidation proceedings. The decree entered into force on 15 April 2022 and affects the solvent liquidation of Sberbank Hungary, a subsidiary of Sberbank Europe AG, the Hungarian member of the Russian Sberbank group.

As outlined in our previous briefing note on the Corporate Insolvency and Governance Act 2020, a new restructuring tool was introduced in June 2020 in the form of the Part A1 free-standing moratorium (the "Moratorium").

Welcome to the sixth edition of our quarterly disputes newsletter, which covers key developments in the dispute resolution world over the last three months or so.

So far, the Bulgarian economy has encountered various COVID-19-related effects, but a surge in insolvencies is not yet one of them. Although the Bulgarian state was slow in implementing measures to help companies affected by the pandemic – which measures turned out to be insufficient – there has been no visible increase in bankruptcy proceedings since 2020.

There has been a longstanding need in Hungary for a legal instrument to rescue distressed companies. The only legal solution so far for such companies was the unpopular and inflexible bankruptcy procedure, which is also risky for the debtor, as failure will automatically turn into a liquidation proceeding and the company will cease to exist. Bankruptcy, with its formalistic procedures and limited involvement of creditors in the decision-making, has done more harm than good. It also usually stigmatised the debtor.

As of 17 July 2021 the EU restructuring directive¹ was implemented in Austria by the new Austrian Restructuring Code (ReC). The ReC allows debtors to enter formal restructuring proceedings before actually becoming insolvent. To minimise the disruption to debtor's operations, the proceedings are not public, a ban on enforcement of collateral can be implemented and the rights of counterparts to amend or terminate existing contracts are significantly curtailed.

The High Court has dismissed a challenge to Caffe Nero's company voluntary arrangement (CVA) in Young v Nero Holdings Limited. The Applicant in the proceedings, Mr Young, was a landlord of premises let to the First Respondent, Nero Holdings Limited (the Company) and challenged the Company's CVA under s 6(1)(a) and (b) of the Insolvency Act 1986 (the Act).

In response to the COVID-19 pandemic, legislation was introduced during 2020 to prevent creditors filing statutory demands and winding up petitions on the basis of their debtor's inability to pay its debts, unless it could be shown that non-payment was not a result of the pandemic. These temporary measures had been extended a number of times during the pandemic as businesses continued to suffer the effects of multiple lockdowns and trading restrictions, but are now gradually being phased out.

The Czech Ministry of Justice recently published a bill on preventive restructurings (the "Bill") implementing the directive on preventive restructuring frameworks which will introduce a brand-new legal tool preventing the insolvency of viable enterprises in temporary financial difficulties.

The Bill is now heading to the legislative process and should become effective from July 2022. Although it may still undergo some changes, it is already obvious that it will revolutionise Czech insolvency law.

Editorial | Restructuring Directive