The Corona Crisis leads worldwide to critical situations for companies.
In light of this, Digitorney has asked lawyers from various countries specialized in restructuring law for recommendations on what needs to be done and which solutions are at hand to weather the Corona Crisis.
1) When does a company need to file for insolvency in the USA?
In the US, bankruptcy or insolvency law is governed at the federal level through the Bankruptcy Code. Pursuant to the Bankruptcy Code and different from many other countries, a debtor is generally not obligated to commence a bankruptcy proceeding due to financial distress or illiquidity. Specifically, a debtor ("voluntary petition") or a creditor ("involuntary petition") may commence a bankruptcy proceeding. MORE
2) What liability risks exist for the management in the USA in a corporate crisis?
Due to the COVID-19 pandemic, management of US companies face various liability risks, including health and safety of employees and other individuals along with compliance with continuing contractual obligations. Concerning individual liability risks, management may face claims by employees suffering illness or other negative effects to their health due to insufficient policies or measures for protection from COVID-19. MORE
3) Is there any state aid available for companies in the USA due to the Corona crisis?
Following the outbreak of the COVID-19 pandemic, the US Congress has been working on stimulus legislature to provide aid to individuals as well as certain industries. While this legislation has yet to be ratified, the current scope would include 100 billion US Dollars in assistance for hospitals, 350 billion US Dollars in assistance to small businesses, 500 billion US Dollars in aid for companies in effected industries, including airlines and cruise lines: MORE
4) What immediate measures should a company in the USA take if it is affected by the Corona crisis?
In addressing the COVID-19 pandemic, management of US companies must ensure the safety and health of its employees as well as any other relevant individuals, while attempting reduce the economic impact on its operations. In particular, management should implement policies based on the guidelines of the Center for Disease Control (CDC) as well as regionally applicable governmental orders, such "Stay at Home" or "Shelter-in-Place" proclamations: MORE
1) When does a company need to file for insolvency in France?
Bankruptcy Law in France offers several processes to companies depending on the level of difficulties they are encountering: It goes from Amicable procedures (mandate ad hoc, conciliation) to actual court-monitored procedures (procedure de sauvegarde, redressement judiciaire, liquidation judiciaire). MORE
2) What liability risks exist for the management in France in a corporate crisis?
French law provides for civil and criminal liability of the management under certain conditions. We will not detail them here. Regarding the current crisis, some situations must be studied carefully considering the decisions taken by the government. MORE
3) Is there any state aid available for companies in France due to the Corona crisis?
Some support measures/ state aid for businesses are implemented by the French State due to the Corona crisis, e.g. ,easures to support the granting of loans to companies, guaranteed by the State (BPI France). MORE
4) What immediate measures should a company in France take if it is affected by the Corona crisis?
Apart from the financial measures detailed at Question 3, the management of a company in France can take several measures if it is affected by the Corona crisis, e.g. measures to protect health and safety of employees, and contain the effects of the downturn. MORE
1) When does a company need to file for insolvency in Brazil?
Pursuant to the Brazilian Law, a company should file for judicial reorganization in order to overcome its economic-financial crisis and keep its production, employments and creditors’ payments. The company shall submit the reasons which led to its financial crisis situation. Thus, the company should attach to its request: MORE
2) What liability risks exist for the management in Brazil in a corporate crisis?
In light of the current situation we identify the following liabilities’ risks of managing directors in Brazil: e.g. comply with and execute the obligation to obtain and fulfill all the required information in the business documents, payments of contracts and obligations in general may be delayed or even suspended. MORE
3) Is there any state aid available for companies in Brazil due to the Corona crisis?
The Brazilian Government has already issued support measures aid for business in Brazil, e.g. flexibility of some labor regulations, suspension of the severance indemnity fund’s collection and payments to the federal government of “simples” during 3 months, release of more than R$ 5 billion to be loan for public banks to micro and small business. MORE
4) What immediate measures should a company in Brazil take if it is affected by the Corona crisis?
We recommend that the following measures be taken by a company affected by the Corona crisis: e.g. putting together a response team with members of different areas of the company responsible to centralize information and decisions and coordinate the effects and actions in connection with this crisis. MORE
1) When does a company need to file for insolvency in India?
Under the Indian insolvency regime, a company is subject to insolvency proceedings when: (i) it fails to meet its payment obligations and its creditors initiate insolvency proceedings against such company; or (ii) the shareholders of the company voluntarily decide to liquidate the company. MORE
2) What liability risks exist for the management in India in a corporate crisis?
The liability of the management is two-fold: employer-employee risk and business risk. Employer-employee means that the management is responsible for ensuring that a safe working environment is maintained, and the company adheres to regular directions and guidelines. MORE
3) Is there any state aid available for companies in India due to the Corona crisis?
At present no state aids or support measures have been announced or are being offered by the governmental authorities. However, there have been press reports that government agencies have been speaking with various industry stakeholders to understand their concerns. MORE
4) What immediate measures should an Indian company take if it is affected by the Corona crisis?
To a certain extent, the immediate measures a mangement may take or implement is industry specific (as some industries will be affected more than others). Some immediate measures the management may undertake are as follows. MORE
1) When does a company need to file for insolvency in Singapore?
In Singapore a company is deemed insolvent when (1) it is unable to pay its debts as they fall due or (2) if its liabilities exceed its assets. As directors owe fiduciary duties to the general body of the company's creditors, the directors should consider – but are not obliged to – place the company in liquidation in the above situations. MORE
2) What liability risks exist for the management in Singapore in a corporate crisis?
The markets indicate that a recession is possible as companies continue to face pressure in the breakdown of international supply chains, disruptions to manufacturing, cash flow issues and labour shortages. Companies will need to consider their obligations in response to government announcements, business disruptions and other commercial risks arising from the Corona crisis. MORE
3) Is there any state aid available for companies in Singapore due to the Corona crisis?
The Singapore Government has introduced the following measures to help companies and workers stay afloat: MORE
1) When does a company need to file for insolvency in Algeria?
Pursuant to article 215 of Algerian Commercial Code, “every commercial legal entity or merchant and even a non-commercial individual, who ceases to pay its debts, must declare (file a declaration) such non-payment within 15 days in order for opening of a judicial procedure of bankruptcy/insolvency”. MORE
2) What liability risks exist for the management in Algeria in a corporate crisis?
There is no specific legal provision related to the liability risks threatening management in Algeria in the corporate crisis. However, the management remains liable (civil and criminal liability) toward the company, third parties, and the employees even during crisis period. MORE
3) Is there any state aid available for companies in Algeria due to the Corona crisis?
No state aids have been issued for the moment by the Algerian Government. However, the General Tax Administration has announced some measures in order to help the companies during the Corona Crisis in term of tax payment. MORE
4) What immediate measures should an Algerian company take if it is affected by the Corona crisis?
There are no legal provisions related to the immediate measures that the management of a company should in Algeria take if it is affected by the Corona crisis. However, in practice, we have noticed that some companies have implemented the following measures in order to protect the spread of the virus and affect the employees’ health. MORE
1) When does a company need to file for insolvency in Austria?
In principle, there is an obligation to file for insolvency as soon as the company is either illiquid or, alternatively, in the case of legal persons (or legal entities for which no natural person has unlimited liability, such as a GmbH & Co KG) as soon as the requirements for over-indebtedness are met. MORE
2) What liability risks exist for the management in Austria in a corporate crisis?
In Austria, managers (managing directors, management board members) are in principle not liable for the liabilities of the company. Such a liability can only be considered if legal regulations expressly prescribe this or if the managing director fails to comply with his or her duties of care or violates legal regulations. MORE
3) Is there any state aid available for companies in Austria due to the Corona crisis?
The numerous measures listed below, which the Austrian Federal Government as well as individual federal provinces intend to take to support companies, partly stem from project reports and/or press releases only and have therefore from a legal perspective not yet been fully implemented. MORE
4) What immediate measures should an Austrian company take if it is affected by the Corona crisis?
In order to avoid administrative penalties of up to EUR 30,000 pursuant to Section 3 of the COVID-19 Measures Act, each entrepreneur should check whether his or her own business premises are subject to the prohibition of entry under the Ordinance published in Federal Law Gazette II No 96/2020. MORE
1) When does a company need to file for insolvency in Thailand?
In the wake of the Asian financial crisis of 1997, Thailand reformed its insolvency law. During that time, the economic crisis brought many Thai companies to their knees. A severe crisis is now upcoming 23 years later due to the current Corona pandemic. This affects companies in the tourism and travel sector before others which hits the Thai economy particularly hard, because the tourism industry is one of Thailand’s most important sectors representing up to 18% of GDP and contributing significantly to the growth of the Thai economy in recent years. MORE
2) What liability risks exist for the management in Thailand in a corporate crisis?
In theory, liability of directors and management only needs to be feared in the event of a breach of duty. However, the duties of directors are varied and governed by many different laws, in particular the Thai "Civil and Commercial Code", consumer protection regulations, tax laws such as the "Revenue Code" and numerous other legal sources. Therefore, in practice the risk of liability cannot be easily assessed by the non-lawyer. MORE
3) Is there any state aid available for companies in Thailand due to the Corona crisis?
So far, the Thai government has approved inter alia the following aid measures for companies in distress due to the Corona crisis. Furthermore, industry-specific aid measures are currently being discussed. MORE
4) What immediate measures should a Thai company take if it is affected by the Corona crisis?
What immediate measures should the management of a company in Thailand take if it is affected by the Corona crisis? On the one hand, Thai companies need to follow the same principles as all companies worldwide: all conceivable measures must be taken to ensure the liquidity in the short and medium term, worst-case scenarios have to be calculated, additional cash flow sources need to be explored, discussions with current and alternative contractors upstream and downstream need to be initiated for example to minimize the risk of supply chain disruptions. MORE
1) When does a company need to file for insolvency in Switzerland?
Swiss bankruptcy and insolvency law provide only for bankruptcy proceedings triggered either by the debtor and/or its board and management or by any of its creditors. Instead of declaring the debtor bankrupt, the competent court may grant a general stay to give it sufficient time for a private financial restructuring. The bankruptcy court can also order that the case be transferred into a court-managed settlement and composition procedure. MORE
2) What liability risks exist for the management in Switzerland in a corporate crisis?
If the last annual balance sheet shows that one-half of the share capital and legal reserves is no longer covered, the board of directors must convene a general meeting without delay and propose financial restructuring measures. Where there is a valid reason for over-indebtedness, an interim balance sheet must be drawn up and submitted to a licensed auditor for examination. MORE
3) Is there any state aid available for companies in Switzerland due to the Corona crisis?
In an unprecedented, bold and unsee step so far in the history of Switzerland, The Swiss Federal Government has decreed in these hours a total legal standstill for all debt collection and bankruptcy proceedings under the present Swiss Debt Collection and Bankruptcy Act. which is effective until April 19, 2020, whilst seizure proceedings and other urgent debt collection proceedings remain possible. MORE
What immediate measures should a Swiss company take if it is affected by the Corona crisis?
There are no legal provisions related to the immediate measures that the management of a company should in Algeria take if it is affected by the Corona crisis. However, in practice, we have noticed that some companies have implemented the following measures in order to protect the spread of the virus and affect the employees’ health: MORE
1) When does a company need to file for insolvency in Australia?
The unprecedent business disruption attributable to COVID-19 has caused signficiant solvency and liquidity issues for Australian companies.The test for insolvency in Australia is whether a business can pay its debts as and when they fall due. That is, it is a cash flow and not a balance sheet test.
2) What liability risks exist for the management in Australia in a corporate crisis?
The recently enacted safe harbour provisions under the Act may provide an avenue for directors to avoid personal liability, in situations where they become aware that the company is, or is becoming, insolvent and pursue a course of action which is reasonably likely to lead to a better outcome for the company. MORE
3) Is there any state aid available for companies in Australia due to the Corona crisis?
The Australian Government‘s economic response to the impacts of the COVID-19 outbreak include a variety of tax concessions, as well as cash flow assistance packages aimed at ensuring that business remain solvent. The Government has increased the instant asset write-off threshold from AUD 30,000 to AUD 150,000 and expanded access to include businesses with an aggregated annual turnover of AUD 500 million, up from AUD 50 million. MORE
4) What immediate measures should an Australian company take if it is affected by the Corona crisis?
In order to address the challenges faced by COVID-19, businesses should prioritise effective communication, both internally and with investors, in relation to the impact of the current situation and an outline of any steps taken to minimise disruption. Where required, businesses should also ensure compliance with any continuous disclosure requirements, particularly in cases where COVID-19 poses a threat to the market value of the company’s securities. MORE
1) When does a company need to file for insolvency in Poland?
According to Polish Bankruptcy Act, a company needs to file for bankruptcy within 30 days after one of the following prerequisites takes place: (i) a company has delayed payment of its dues for longer than 3 months, or (ii) the value of a company’s liabilities exceeds the value of its assets during a period of at least 24 months. MORE
2) What liability risks exist for the management in Poland in a corporate crisis?
In general, members of management boards of Polish company are personally liable with all their estate for the civil and tax debts of the company if it does not have sufficient assets to cover these debts. The liability of members of the management board may be excluded if they are able to prove that [...] MORE
3) Is there any state aid available for companies in Poland due to the Corona crisis?
The Polish government announced a business support plan called the “Anti-crisis shield” on 18 March 2020. Its value is estimated at PLN 212 billion (10% of Poland’s GDP). The key propositions include inter alia micro-loans of up to PLN 5,000 for micro-entrepreneurs. MORE
4) What immediate measures should an Polish company take if it is affected by the Corona crisis?
Monitor the financial performance of the company in order to be able to file a petition for bankruptcy in due time (to exclude any personal liability), monitor government measures aimed at securing sufficient financial liquidity of entrepreneurs affected by the Covid-19 crisis […] MORE
1) When does a company need to file for insolvency in Germany?
German insolvency law basically provides for two scenarios with the obligation to file and one carries the option to file for insolvency. As announced by the BMJ (Federal Ministry of Justice and Consumer Protection) in a press release on March 16, 2020, a legal regulation to suspend the obligation to file for insolvency is to be created in the short term. This is intended only to protect companies that get into financial difficulties as a result of the corona pandemic. MORE
2) What liability risks exist for the management in Germany in a corporate crisis?
The managing director of a GmbH or the board of directors of a stock corporation are generally liable with their entire private assets when filing for insolvency too late. It is imperative to analyze such risks for each individual case even in case the above-mentioned special measures of the BMJ really enter into force. MORE
3) Is there any state aid available for companies in Germany due to the Corona crisis?
On March 13, 2020, the BMF (Federal Ministry of Finance) adopted a package of measures to cushion the effects of the corona virus. The aim is to protect jobs, support companies and provide companies and businesses with sufficient liquidity to cope with the corona crisis. MORE
4) What immediate measures should a German company take if it is affected by the Corona crisis?
Potential threats and their consequences are different for each company. Whether it is disruptions in the supply chain, in production due to increased cases of infection among employees, or problems with customers, all disruptions carry the risk of failing to achieve the planned economic goals for the current fiscal year. MORE
1) When does a company need to file for insolvency in Turkey?
der Turkish Law, company’s insolvency is defined as a situation that a company is no longer able to pay its debts in accordance with the Turkish Commercial Code and Execution and Bankruptcy Code. In some cases, the company has to apply to the court to be deemed insolvent, which is called voluntary insolvency. MORE
2) What liability risks exist for the management in Turkey in a corporate crisis?
One of the major risks threatening the managements in Turkey is breaching their contractual obligations towards third parties due to the force majeure situation caused by the Corona crisis. Accordingly, the managements shall immediately take measures to mitigate such risks and if necessary [...]. MORE
3) Is there any state aid available for companies in Turkey due to the Corona crisis?
On 18 March 2020, the Turkish government adopted support package worth 100 Billion Turkish Liras including among other the below measures and aids for businesses in Turkey to mitigate the losses caused by the Corona virus: MORE
4) What immediate measures should a Turkish company take if it is affected by the Corona crisis?
Since companies as employers are responsible for the work health and safety of their employees, the employers shall take certain steps. The right of the employer to regulate the execution of the work, the behavior of the worker, etc., without violating the Law and the employment contract, is called "Management Right". MORE
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