Many companies are facing new and challenging circumstances given the fast-moving COVID-19 situation. It is likely that during the coming weeks you and your fellow board members will be called upon to make difficult decisions. This is a critical time during which it is imperative to ensure you are focused on the key issues and equipped to act prudently and in accordance with your duties.
What are your duties?
Global outlook
Impact on businesses
Managing insolvency risks
Considerations for companies and directors
Consequences for lenders
Increasing cash flow pressure on many businesses has resulted in a heightened risk for directors that a company may be wrongfully trading and personal liability may then accrue to the directors.
Increasing cash flow pressure on many businesses has resulted in a heightened risk for directors that a company may be wrongfully trading and personal liability may then accrue to the directors.
This briefing looks at the potential impact of the coronavirus COVID-19 on businesses and examines steps that can be taken by stakeholders and directors to recognise, manage and mitigate the risks. In particular, we look at: the potential impact on businesses; managing insolvency risk; considerations for directors; and considerations for lenders.
Global outlook for the coronavirus situation
The recent English judgment of System Building Services Group Limited¹ is an important decision for directors of offshore companies in 'soft touch' provisional liquidation, and highlights the importance of conducting a thorough analysis of the order appointing provisional liquidators for the purposes of ascertaining the scope of directors’ duties that apply during the course of their post-appointment restructuring efforts.
Alexandra Vinogradova v (1) Elena Vinogradova, (2) Sergey Vinogradov (BVIHCMAP 2018/052)
With the States of Guernsey's approval yesterday of the Companies (Guernsey) Law, 2008 (Insolvency) (Amendment) Ordinance, 2020 (the "Ordinance"), Guernsey took a step towards further enhancing its reputation as a robust jurisdiction for restructuring and insolvency.
As year end approaches, it is time to start planning the liquidation of Cayman Islands entities that have reached the end of their life cycle, to ensure that unnecessary fees are not incurred.
The Central Bank of Ireland ("CBI") issued a letter to all fund management companies on 7 August 2019 ("Letter") with a timely reminder of their ongoing obligations regarding liquidity management and compliance with legislative and regulatory obligations for UCITS and AIFs. This is in the context of the CBI's continuing engagement with industry on Brexit preparedness, and it stated it will have regard to the Letter as part of its future supervisory engagements.