The COVID-19 pandemic has caused economic turmoil that may provide opportunities for financially secure companies with capital to make a strategic acquisition of distressed assets and for investors to acquire valuable assets. The following highlights some important considerations when evaluating a purchase of distressed assets.^[1]

How to Finance the Purchase of Distressed Assets

On June 23, the New York County Supreme Court issued a rare preliminary injunction temporarily halting a mezzanine lender’s UCC foreclosure sale of the Mark Hotel in New York City because the procedures for the foreclosure sale were not commercially reasonable in light of conditions caused by the COVID-19 pandemic (D2 Mark LLC v. Orei VI Investments LLC, 2020 WL 3432950 (2020)).

The COVID-19 pandemic and forced shutdowns have wrought a wave of financial distress globally for individuals and businesses, large and small. Three months in, the effects of the shutdowns have begun to materialize in the United States in the form of bankruptcy filings. According to a recent report, in May 2020 alone, some 27 companies reporting at least $50 million in liabilities sought court protection from creditors.

In this article we consider how the current challenging environment is impacting M&A in the insurance sector

We are living in volatile times. As a consequence of the COVID-19 virus, our equity and high-yield markets have witnessed large swings, making it difficult to value assets. Uncertainty over the timing and extent of the recovery has also made it difficult to value income streams. Moreover, debt financing has become more challenging. All of these factors are contributing to a challenging environment for M&A.

For many companies facing financial stress, restructuring liabilities is the only way for their business to survive. Consensual restructuring, or voluntary workout, requires agreement from creditors to reorganise the company’s liabilities, and is typically implemented by agreement between the company and its creditors. Court-based restructuring processes, on the other hand, involve at least some degree of legal coercion of creditors to vary or release liabilities.

Samantha Gilbert speaks to compliance leaders from the healthcare, financial services, insurance, IT and commercial sectors on what to expect from the new “business as usual” and enforcement. Conduct reviews, increased regulatory scrutiny and long-term digitisation are some key issues for compliance teams to prepare for.

Lexology Pro Compliancetakes a look at some of the most informative articles published on Lexology this fortnight for compliance teams to stay up-to-date, including key guidance from regulators around the world and practical tips to help businesses adapt to a new normal.

As Canadian businesses continue to grapple with decreased cash flow as a result of COVID-19, many are looking for ways to generate cash and remain viable. One such way is to sell non-core assets or divisions through a pre-packaged sale transaction.

Pre-Packaged Sale Overview

In the wake of the COVID-19 pandemic, more and more businesses are finding themselves in distress. According to Forbes, 30 million small businesses across the United States are experiencing financial distress, with half of those blaming the global pandemic for revenue decline. These challenges are especially felt by small businesses who may have limited access to the financial markets and investors as compared to larger companies, both public and private, and especially those whose owners have made personal guarantees on business loans.

Background

Ever since the Hon’ble Finance Minister of India announced the suspension of initiation of corporate insolvency under the Insolvency and Bankruptcy Code 2016 (IBC) in wake of the COVID-19 pandemic, there have been several market speculations about the nature and extent of the proposed suspension and its implications. With the promulgation of the amendment ordinance to IBC, most of these speculations have been put to rest, however owing to the language of the Ordinance, a new set of issues may have arisen.