In light of the ongoing economic turmoil in the global markets, we have prepared a brief summary of the themes we are seeing in relation to insolvency legislation across Europe:
- The German Government announced on 16 March 2020 that it is preparing a statutory regulation to suspend the strict obligations for directors to file for insolvency within 3 weeks of discovering illiquidity or over indebtedness until 30 September 2020 where companies are in financial difficulties due to the spread of COVID-19.
- The Spanish Government adopted the Royal Decree 8/2020 of 17 March 2020, which outlines exceptional emergency measures to deal with the spread of COVID-19. The Royal Decree, has suspended the duty for directors to file for insolvency (applicable to insolvency companies) and the duty for directors to initiate the dissolution, insolvency or restructuring of a company (applicable to companies whose net assets fall below 50% of the company’s legal capital) for two months.
- In France, on 19 March 2020 the Ministry of Justice instructed the commercial courts across France not to open new proceedings for receivership or compulsory liquidation.
- In the UK, the High Court of England and Wales ordered on 23 March 2020 that all winding up petitions due to be heard in the Business and Property Courts of England and Wales from 25 March 2020 have been adjourned until June at the earliest. For more information regarding the full list of winding up petitions due to be heard and their adjournment dates please visit the government website here.
- In London, the County Court at Central London introduced a protocol on 24 March 2020 relating to insolvency and company work. Under the protocol, the Court has arranged with HMRC that no bankruptcy order will be made on HMRC petitions currently listed for hearing. The Judge assigned to any existing petitions will make an order for the petitions to be relisted 12 weeks from the existing hearing date. The same approach will be applied to other bankruptcy petitions unless a request for a remote hearing is made by email to [email protected].
- The County Court at Central London will now deal with all applications in bankruptcy proceedings on the first occasion on paper, and any directed hearings will take place remotely. Public examinations will remain listed but only for the assigned Judge to make an order on paper. Unless there is a request for rescission, conclusion or a suspension of discharge from bankruptcy (which will be dealt with on paper), the Judge will adjourn the public examination.
- Claims for the restoration of companies to the register will remain listed but only for the purpose of the assigned Judge considering the application on paper.
It remains uncertain as to whether the UK Government will set out measures to allow similar breathing space for directors and companies as proposed across Europe. We are monitoring the updates carefully and would be happy to discuss.
A link to our COVID-19 web page is here where you can find further advice notes which is being updated on a daily basis.
If you require further information about anything covered in this briefing, please contact Dominique Hodgson, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, March 2020