The Australian government has taken swift action to enact new legislation that significantly changes the insolvency laws relevant to all business as a result of the ongoing developments related to COVID-19

Around the globe, our lawyers are receiving a large number of enquiries about mitigating the impact of the coronavirus disease 2019 (COVID19) on companies' business operations and finances. Governments in several countries have reacted quickly to try to mitigate COVID-19's impact by changing or amending their insolvency laws. This memorandum is an overview of the key changes in restructuring and insolvency laws that select countries have undertaken in response to the COVID-19 pandemic

The Government is in the process of pushing the Corporate Insolvency and Governance Bill through Parliament, with it anticipated to become law later in June. The Bill represents the biggest overhaul of the UK’s insolvency legislation for over 30 years.

On 20 May 2020, the UK Government introduced the Corporate Insolvency and Governance Bill (the “Bill”) to the House of Commons. The Bill introduces a new debtor-in-possession moratorium to give companies breathing space in order to try to rescue the company as a going concern. The Bill is currently only in draft form and therefore amendments may be made. It is anticipated that the legislation will come into force by the end of June 2020.

This blog (the first in a series of blogs about this new measure) outlines the key provisions of the moratorium and how it will work.

In the wake of the COVID-19 pandemic, we are often asked what our clients should do if a business (such as a supplier, customer or any other contract counterparty) is suffering distress and may be contemplating filing for insolvency.

This quick guide summarises the duties that a managing director of a German GmbH (hereinafter "director") is subject to, and how those duties change when the company is insolvent or at risk of being insolvent.

It also gives an overview of the personal risk to directors when the company is in financial difficulty.

In the past several years, the United States has seen a tidal wave of retail sector chapter 11 cases. The end result for most of those cases has been going out of business and liquidation sales. On March 11, 2020, Modell’s Sporting Goods commenced its chapter 11 cases seeking to follow a similar path taken by other retailers by closing all 153 sporting goods stores in a controlled liquidation. Unfortunately for Modell’s, the COVID-19 crisis hit the United States just as Modell’s commenced its liquidation.

With respect to the dynamic course of events regarding the coronavirus disease 2019 (COVID-19) commonly known as the "coronavirus" we address the threat of insolvency and related liability of the statutory bodies (Directors), and provide a list of practical mitigating steps.

Test the Liquidity of Your Company

The company is insolvent in a form of illiquidity (in Czech: padek) if (a) it has several creditors; (b) due and payable debts for more than 30 days; and (c) it is not able to fulfil them. Therefore, keep up-todate records about due payments and remaining periods.

On June 26, 2019, the European Parliament and the Council of the European Union published a new EU Restructuring Directive on preventive restructuring frameworks, discharge of debt and disqualifications, and measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt (“Directive”).

This is an extraordinary achievement given the existing differences in restructuring regimes across EU Member States.

Today the Government published draft provisions for inclusion in the Finance Bill which will amend the Insolvency Act 1986 and grant HMRC preferential status on insolvency. A status that was removed in 2003 but which will be re-instated (in part) from 6 April 2020.

Despite huge concern from the lending market, voiced in responses to the Government’s consultation on this measure, the only material change we can see is confirmation that preferential status will not apply to insolvency proceedings commenced before 6 April 2020.