In November 2008, the European Commission (EC) found state aid granted by the Polish government to two Polish state-controlled shipyards (Stocznia Szczecinska Nowa and Stocznia Gdynia), illegal under EU single market rules and requested its return to the government with accrued interest. The EC decided however to postpone the enforcement of the return of state aid for seven months until 6 June 2009 to allow for the prior public sale of the shipyards’ assets at market price.

On 23 March 2009, the Committee of European Securities Regulators (CESR) published a report on the market impact of the Lehman Brothers default. The report began with a brief discussion of the causes of the bankruptcy of Lehman Brothers Holdings Inc. It then set out some of the regulatory and industry responses to the challenges in the securities field including:

Getting your house in order

Understand your counterparty risks

It is very important in the present climate to understand your contracts and your counterparty risks. We are finding an increasing number of clients “stress testing” their contracts and considering the consequence of an insolvency event. This is good practice; particularly since to identify weaknesses in structures and counterparty risk upon insolvency may afford you the time to fix it before things do go wrong.

Where are the documents?

The following is a broad overview of the duties and liabilities of directors when their company is in financial difficulties. It is a general guide only and there will be variations according to the specific laws in each jurisdiction.