Coronavirus Corporate insolvency governance Bill Paris Smith
COVID-19 and corporate restructuring & insolvency – week 9 – Corporate Insolvency and Governance Bill
Stop Press: From the entry stage on the impact of the 2020 Corporate Bankruptcy Management Law (CIGA) in June 2020, it was a pandemic coronovirus that was triggered by an unprecedented economic situation before the blog was provided. It was a countless correction and shor t-term rules designed to take into account. The following is a major configuration:
- Space} In cooperation with CIGA2020, the "stop" is the "stop" of illegal transactions dating back to the period from March 1, 2020 to September 30, 2020. Rejected was introduced from November 26 to April 30 due to CIGA (Coronavirus) regulations (suspension of responsibility for no n-occurring transactions and extension of the corresponding period), from November 26 to April 30. It was extended from 2021 to June 30, 2021 due to regulations on CIGA (extension of the corresponding period).
- Based on the CIGA2020, the introduction of creditors' petitions for clearing and legitimate claims will be restricted from March 1, 2020 to September 30, 2020. This stage was held three times from December 31, 2020, March 31, 2021, and June 30, 2021, and is currently being implemented on September 30, 2021.
- The restrictions on the foreclosure of the paid site will be introduced retrospective from March 26, 2020 to June 30, 2020, and then conducted four times from December 31, 2020 and March 31, 2021. At present, it is currently held 25 times until March 25, 2022, and the impact on the recovery of the paid lease receivables (CRAR) is restricted. It is.
Finally, some news
Almost two months later, the Minister in charge of the business will stop the effects of the law that will actually give a new tool that will sparkle the ruin and prohibit illegal transactions from March 1 to June 30, 2020. Finally, we announced that we are proposing a new bill for the Diet's declaration (from May 20, 2020), we finally found an opportunity to make the desired bills. 。 The bill will be considered in the second reading on June 3, and will be going to the aristocratic house. It is almost impossible to be disposed of royal family until the end of June.
A more balanced test will be done after reading the bill twice in the right month.
Headline points
Moratoria
Companies deemed insolvent (or likely to become insolvent) can obtain a moratorium for an initial period of 20 business days, freeing them from creditor action and giving them breathing space to apply for subsequent loans or restructuring. Notably, during the moratorium period, landlords will not be able to take away the company's lease without court approval, no steps can be taken to secure security over the company's real estate (except for filing guarantees and contracts), and no steps can be taken to return products except with court approval.
Companies have the right to obtain a moratorium automatically, unless they are directly excluded (e. g. if they are/were the subject of ongoing or recent public insolvency proceedings, insurance companies, banks, investment companies, etc. ... d.). Directors can be granted a moratorium through the court, together with a statement that the company is unable to pay its debts and a statement from so-called "observers" that the moratorium is likely to result in the company's profitability as a going concern. Once the moratorium comes into force, its effects are monitored by observers who must be licensed insolvency professionals.
Directors who wish to extend this period may do so by filing a support notice and application with the court, without the consent of the creditors, for a further 20 business days. Extending the period beyond 40 business days thereafter depends on the creditors' pre-interruption incentives or court approval.
Restructuring plan
Companies that have encountered or are likely to encounter financial problems that affect or are likely to affect their ability to continue operating may offer to each class of creditors or members a restructuring agreement aimed at eliminating, reducing, preventing or mitigating the consequences of those financial problems.
The proposed agreement must be approved by 75% of each class of creditors or members. Conflicting classes of creditors or members may be consolidated by a restructuring agreement, subject to the court's approval, provided that the court is satisfied that none of the dissenters will be in a worse position than if the company had entered full insolvency proceedings. Such a "compression" between classes should allow the company to adjust its financial and joint structure without having to resort to insolvency proceedings from March 1 to June 30, effectively giving the company in difficulty an extra break.
Petitions
Lenders cannot file for the company's liquidation (retroactively) from April 27 to June 30, 2020, based on the expiration of the legal requirements presented for the period from March 1 to June 30. Similarly, a creditor cannot bring a claim based on the pendency of a court decision, inability to pay the debt as offered, or the value of the company's assets being less than the liabilities, unless the creditor has reasonable confidence that the coronavirus has not had a financial impact on the company, or the circumstances would have arisen even if the coronavirus had not had a financial impact on the company.
The court "may" issue a terminating order for an application filed on or after March 1 if it is satisfied that the grounds set out would apply even if the coronavirus had not had an economic impact on the debtor. Any existing terminating order made on or after April 27 and up to the effective date of the Bill, which would not be issued if the court had considered the above points, will be set aside retrospectively. The court may issue directions to restore the company to the state it was in immediately before the application. In case of doubt, the official receiver or private liquidator (if any) should refer the matter to the court.
While it remains to be seen whether these provisions can be applied in practice, it should be noted that these provisions go far beyond Alok Sharma, as they are not limited to commercial tenants.
Wrongful trading
When determining the responsibility of the director's responsibility for illegal transactions and the company's assets (if any), the Court occurs from March 1, 2020 to June 30, 2020. You should go from the fact that you are not responsible for the worst movement of the creditor's money. Again, what does this mean you don't understand?
Termination clauses
Most large suppliers of products and offers have been introduced in the phase from March 1 to June 30, 2020 in connection with the company or in the event held before the start of the collapse. For the fact, it is not possible to bring the execution of the end clause and the status of the contract (for example, the end of the supply). Supplier must instruct the court to cancel the contract if it leads to unreasonable hardships.
Meetings and filings
Temporary exemptions in normal claims will be held to hold a meeting and submit a licensed document from March 26, 2020 to September 30, 2020. The municipal clerk will have the authority to extend the expiration date, but if the stage has a place where the stage is set to set 3, 6 or 9 months, the stage will occupy 12 months. If the filing document extension stage does not exceed 42 days, at the event. The company will still have the opportunity to hold the necessary conferences and vote in other methods (eg, electric forms), including whether this is not considered by the Charter.
Rounding up
In our opinion, illegal transactions and petition configurations are unlikely to have a major positive effect, causing more questions than identifying the answer. For example, the prohibition of illegal transactions, as well as the other directors of the director, are not excluded, basically, the directors still take responsibility for all types of the main crimes. See (for more information, see our blog: COVI D-19 and CRAMP & AMP; Control Moratrium and Organizational Reorganization Scheme, but more attractive qualities of new rules to end contracts with suppliers. We hope that they will actually be revealed in the second reading on June 3, and of course we will give a more detailed digest during this time.
At least, the announcement of this bill will give us an excuse to work in the bankruptcy industry, and we will no longer need to rely on the "5 o'clock briefing law". In the recession, I am grateful to the Bankruptcy Processing Agency for making a great deal of effort to create executable plans, despite the hig h-time constraints and unprecedented events. This plan is based on the past few years of discussions and will definitely support companies that survive incredibly difficult and uncertain times. In the future, we are trying to understand how this new provision can be applied.
This week (May 25) will take a break from updating the blog, but please forgive me! -I also believe that readers will enjoy the opportunity to go out with responsibility.
If you or your acquaintance need advice from the above perspective, please contact our corporate reconstruction and bankruptcy experts. I will be happy to help you.
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This update was written by Lucy and Wrights (lawyer apprentice) and Christopher Persons (court lawyer). < SPAN> At least, the announcement of this bill will give us an excuse to work in the bankruptcy industry, and we will no longer need to rely on the "5 o'clock briefing law". 。 In the recession, I am grateful to the Bankruptcy Processing Agency for making a great deal of effort to create executable plans, despite the hig h-time constraints and unprecedented events. This plan is based on the past few years of discussions and will definitely support companies that survive incredibly difficult and uncertain times. In the future, we are trying to understand how this new provision can be applied.