The German Federal Government’s various aid measures for employees, self-employed persons, small, medium and large enterprises are suitable for alleviating personal hardships, reducing the economic costs of insolvencies and plant closures and supporting the economy. In addition, it is important that the German Federal Government will play also a constructive role in overcoming the crisis on a European level, to avoid the COVID19 pandemic leading to a European sovereign debt crisis.
For directors, the winding up of a company could be judgment day when their past misdeeds come back to haunt them. If insolvency is on the horizon, there are various matters directors should bear in mind lest incurring personal liability if insolvency becomes inevitable.
Unfair Preference
The rules governing unfair preference are found under sections 266, 266A, and 266B of the Companies (Winding-Up and Miscellaneous Provisions Ordinance (Cap. 32) (the “Ordinance”). A company would be deemed to have given unfair preference to a person if:-
The Supreme Court of Canada delivered its reasons today in 9354-9186 Québec inc. v Callidus Capital Corp., 2020 SCC 10, after having unanimously allowed the appeals from the bench on January 9, 2020. Davies represented the principal – and successful – appellants in this matter.1
In its reasons, which were delivered by Chief Justice Wagner and Justice Moldaver, the Supreme Court laid out key principles for the conduct of insolvency proceedings (including proceedings under the Companies' Creditors Arrangement Act [CCAA]):
It is an unfortunate reality that the current pandemic and associated recession will result in the collapse of many businesses, with sectors including retail, hospitality and travel likely to be particularly hard hit. One report by a leading consultancy estimates that half a million UK companies are at risk.
In collaboration with our foreign law firm partners, we continue to update our chart of COVID-19 measures taken by governments around the world. Today’s update includes new information for many countries as indicated in the chart: Global Government Measures Taken in Response to COVID-19.
This note sets out the circumstances in which a creditor may successfully lift a statutory moratorium against a company in administration in England and Wales, and in Singapore.
English law
Due to the COVID-19 crisis, many companies in Switzerland could face bankruptcy.
The coronavirus pandemic is sending shock waves through the business world. If a GmbH (German limited liability company) finds itself in financial distress, the management in particular will be under pressure and must fight for the survival of the business. At the same time, there are various scenarios in which managing directors could be held liable for not implementing crisis prevention measures or exercising the necessary diligence during the crisis.
Liability for inadequate crisis prevention
The COVID-19 pandemic has caused significant disruptions to businesses and their cash flow, with some pushed to the brink of insolvency. The directors of a company should be aware of their duties and potential personal liability if the company continues to trade while it is insolvent. These duties and potential liability may also apply to officers primarily responsible for the management of the company.
Overview of directors' duties
A director owes various statutory and fiduciary duties to the company, including:
Hogan Lovells Publications | 06 May 2020
Five things retailers should consider in the COVID-19 era