On 20 May 2020, the UK Government presented the Corporate Insolvency and Governance Bill (the “Bill”) to the House of Commons. The Bill is being fast-tracked through Parliament, with the aim of completing all stages and becoming law during July 2020. On 3 June 2020, the Bill was passed by the House of Commons and the Bill is now to be considered by the House of Lords, and if approved, it will require Royal Assent before becoming law.
Since the beginning of the COVID-19 crisis, concerns have been raised by directors and bodies representing directors regarding potential liabilities directors may face by allowing businesses to continue to trade where there is a risk of insolvency.
In particular many directors are becoming increasingly concerned of the risks of personal liability being imposed on them if they allow their insolvent business to continue to trade in the anticipation that it will trade itself out of difficulty when the current COVID-19 crisis is behind us.
Die Automobilindustrie zeigt, dass Kooperationen mit Wettbewerbern zur koordinierten Bewältigung der durch die Corona-Pandemie ausgelösten Schwierigkeiten kartellrechtlich möglich sind. Ihre Zulässigkeit kann - flankierend - mit der Kartellbehörde abgestimmt werden.
Since publishing our first article about the impact of Covid-19 on commercial contracts the Government has published the Corporate Insolvency and Governance Bill, which is set to bring in a number of sweeping changes to UK insolvency law.
As Covid19 continues to wreak havoc around the globe, its devastating impact on Thailand’s economy is becoming increasingly apparent. With its borders closed to international travelers for the foreseeable future, Thailand’s tourism industry, whose revenues account for more than 15% of the country’s total GDP, has been largely decimated. Businesses heavily reliant on tourism have closed their doors in the thousands – and many companies who were already experiencing financial difficulties pre-Covid19 have now been pushed over the edge into insolvency.
The COVID-19 regulation on insolvency law set out the conditions under which COVID-19-related over-indebtedness of the company does not to lead to a declaration of bankruptcy by the board of directors (see our blog post "COVID-19 Deferral of Bankruptcy Filing in Switzerland").
On Thursday, 4 June 2020, the Office of the Director of Corporate Enforcement (“ODCE”) published a welcome reminder on points to be taken into account when considering liquidators’ reports and the likelihood of restriction proceedings as a consequence of dishonest or irresponsible conduct.
While the ODCE considers each company’s case on its own merits taking into account:
(i) the liquidator’s report on the relevant insolvent entity; and
(ii) any other relevant information obtained independently of the liquidator, broadly speaking:
The Corporate Insolvency and Governance Bill (the Bill) has completed all of its stages in the House of Commons, without material amendment to the Bill as originally drafted. All three readings in the House of Lords are scheduled to take place in June 2020, and expectations are that the Bill will receive Royal Assent, and will be enacted, very shortly thereafter.
It is unresolved whether a creditor can rely upon a section 553C set-off under the Corporations Act 2001 (Cth) to reduce an unfair preference claim. Until the controversy is resolved by a binding court decision, liquidators and creditors will continue to adopt opposing positions.
Whether or not the impact of the COVID-19 crisis on a party’s ability to perform its obligations will constitute a force majeure event enabling them to claim relief depends on the terms of the contract as applied to the precise circumstances. Where there is no force majeure clause, a party may in rare circumstances be able to invoke the doctrine of frustration.