The Employment (Collective Redundancies and Miscellaneous Provisions) Act 2024 (the “Employment Act”) was signed into law on 9 May 2024 albeit the provisions have not yet commenced. The General Scheme of Companies (Corporate Governance, Enforcement and Regulatory Provisions) Bill 2024 (the “Companies Bill”) was published in March this year and is expected to be enacted later this year. Both make significant changes to the restructuring and insolvency regime. We will continue to keep you apprised of developments regarding the commencement of the Act.
The long-awaited amendment "H" of the Slovenian Financial Operations, Insolvency Proceedings and Compulsory Dissolution Act (the "Act") entered into force on 1 November 2023. The new provisions complete the transposition of Directive 2019/1023,[1] introducing three crucial sets of changes to the Slovenian insolvency and restructuring legislation.
In our practice, we have found that the most common reason for distressed companies to initiate reorganisation measures is a severe liquidity squeeze.
Driven by regulation, banks are increasingly reluctant to grant senior bridge financings, leading companies to resort to trade credits of major suppliers, such as deferrals or generous payment agreements. But these trade creditors are often unaware of significant third-party liability risks.
Shareholders of Austrian limited liability companies ("GmbH") often stipulate the right to purchase the shares of co-shareholders in certain events. These "share purchase rights" (Aufgriffsrechte) entitle the remaining shareholders to acquire the share of a shareholder when a contractually defined event (Aufgriffsfälle), like insolvency or the death of a shareholder, occurs. Often these rights are laid down in articles of association or a separate shareholders' agreement (Syndikatsvertrag). They are generally qualified as option rights.
After a delay of more than a year, an Act on Preventive Restructuring (the "Act") implementing the EU directive on preventive restructuring frameworks finally became effective in the Czech Republic on 23 September 2023. The long-awaited Act introduced a brand-new legal tool enabling viable enterprises in temporary financial distress to achieve restructuring outside insolvency proceedings. It is a voluntary and flexible process requiring cooperation with creditors, but not necessarily with all of them.
Who can use it?
Regulations on Foreign Direct Investment (FDI) are becoming increasingly influential, especially in M&A transactions. It is essential to consider how these regulations will affect foreign creditors, particularly those from non-EU countries. The Slovak FDI Act will have numerous implications for financing and security arrangements.
Security package
After a delay of more than a year, an act on preventive restructuring (the "Act") implementing the EU directive on preventive restructuring frameworks finally became effective in the Czech Republic on 23 September 2023. The long-awaited Act introduces a brand-new legal tool preventing the insolvency of viable enterprises in temporary financial distress.
What is preventive restructuring and why use it?
"Bulgaria transposed the Restructuring Directive's prohibition to terminate contracts via ipso facto clauses, but also (deviating from the Directive) prohibited contractual set-off in restructuring, thus rendering the preservation of many contracts performed via contractual set-off / netting of payment meaningless. So, in drafting ipso facto clauses the impossibility to perform contracts in restructuring, due to the contractual set-off prohibition, may be utilised as an additional trigger for termination, now".
On 11 July 2023, Mr Justice Michael Quinn delivered his judgment in the matter of Mac-Interiors Limited (High Court Record No. 2023/90 COS) (the “Company”), which confirmed and clarified ‘a significant and previously undecided point’ regarding the jurisdiction of the Irish courts to appoint an Examiner to a non-EU registered company with its centre of main interests (“COMI”) in Ireland. McCann FitzGerald act for the Company which brought the application.
On 30 May 2023, Mac-Interiors Limited (the “Company”), a private limited company incorporated and registered in Northern Ireland, but with its COMI in Ireland, presented a petition seeking the appointment of an examiner. On the same day, orders were made, amongst other things, appointing Kieran Wallace of Interpath Advisory as examiner on an interim basis pending the hearing of the Petition.