December 2020 - Second Wave of Changes to Czech Insolvency Law - Covid Act II
With the numbers of active cases of coronavirus SARS CoV-2 rising in the Czech Republic, a new law aiming once again to further mitigate the impact of the measures in combating the coronavirus SARS CoV-2 epidemic has been recently adopted (the Covid Act II). The Covid Act II concerns three main areas: (a) extending the time of the suspension of the debtor’s duty to file for insolvency; (b) renewing the time period for debtors to apply for an extraordinary moratorium protecting them from certain creditor actions; and (c) removing the condition to obtain creditors’ approval of an extension of an already declared extraordinary moratorium. This article by
Petr Sprinz (of Counsel, Allen and Overy, Czech Republic) and
Jiří Rahm (Associate, Allen and Overy, Czech Republic) will address the topics below from the perspective of questions frequently asked by clients
. Download the full story here.
November 2020 - Extrajudicial Personal Bankruptcy in Russia
In Russia, Federal Law No. 289-FZ dated 31 July 2020 has introduced a procedure for the extrajudicial bankruptcy of natural persons. Pursuant to this law, as from 1 September 2020, individuals can enter a bankruptcy process and can obtain a bankruptcy discharge without paying any fees, outside of court proceedings and without the appointment of an insolvency practitioner being necessary. Personal or consumer bankruptcy is a relatively new phenomenon in Russian bankruptcy law. Unlike companies, prior to 1 October 2015, individuals who were not entrepreneurs could not file for bankruptcy in Russia. Occasionally, they even resorted to a “bankruptcy tourism” to benefit from a discharge granted in a foreign jurisdiction. This changed in 2015 with the addition of Chapter X (Personal Bankruptcy) to the Russian Bankruptcy Act. Since then, the number of personal bankruptcy cases has been steadily on the rise.
Ilya Kokorin, of Counsel, Buzko Legal, Russia; Doctoral Researcher, Leiden University looks into the new law
. Download the full story here.
October 2020 - Making Sense of the COMI Definition in Italy
It is well-known that the centre of main interests (“COMI”) is defined by Regulation (EU) 2015/848 (“EIR”) as “the place where the debtor conducts the administration of its interests on a regular basis and which is ascertainable by third parties” (Article 3 (1)). It mainly works both as a ground of jurisdiction (to open the main proceedings) and as a ground for the Regulation to be applied. The Italian Business Crisis and Insolvency Code, which was promulgated by legislative decree 12 January 2019 no. 14, revises the Italian insolvency law. One novelty is to have replaced the debtor’s “principal seat” with the COMI as a ground of jurisdiction (see Article 11), both to open Italian insolvency proceedings and to rule on the so-called “ancillary actions”. Besides, the Code embeds the same definition of the COMI as the EIR (see Article 2 (m)).
Antonio Leandro, Professor, Department of Economics, Management and Business Law, University of Bari, Italy, explains the changes.
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September 2020 - Transposing the Preventive Restructuring Directive: Expert Views from Estonia
The Estonian Ministry of Justice commissioned a group of insolvency experts to provide an expert opinion about the implementation of Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019. The expert group consisted of insolvency specialists from different occupations: attorneys-at-law, insolvency trustees, judges, academics and representatives of banking. This article summarises the aspects of the study, which might be interesting for other European countries facing similar issues in the transposition process. Anto Kasak (Partner, Kasak and Lepikson Law Firm; Lecturer, Tartu University, Estonia) and his team report for INSOL Europe. Download the full story here.
July 2020 - The Rise of a New Phoenix: The English Light-Touch Administration
The economic impact of Covid-19 outbreak has triggered calls for emergency fiscal and legislative measures to address liquidity and legal problems. Some of the measures directly aimed to companies in distress make it harder for creditors to wind-up companies. However, in the wake of governmental intervention, the industry came up with ingenuous solutions to avoid the demise of distressed yet viable businesses. One of these solutions is restructuring or “light touch” administration (‘LTA’). Eugenio Vaccari, Lecturer, University of Essex, UK, investigates if the rise of LTAs is a welcome addition to the rescue toolkit of English practitioners or a mischievous phoenix for the English insolvency framework, and speculate on the impact of the announced regulatory reforms for the future of LTAs. Download the full story here.
June 2020 - The State of Alert and Insolvency Procedures in Romania
Due to the global Covid-19 pandemic, Romania declared a state of emergency, as of 16 March 2020, by Presidential Decree No. 195/2020 (Decree) for 30 days, which, on 15 April 2020 was extended by another 30 days. At the same time as the Decree was enacted, the emergency authorities imposed “lockdowns”, including measures like closing non-essential businesses, limiting public gatherings and limiting people’s movements as well as monitoring the streets to ensure people remain inside. These measures have serious implications for the right to liberty, freedom of association and freedom of movement. In addition, many employees lost their jobs or their individual labour agreements were suspended due to technical unemployment; hotels are empty, flights are grounded, restaurants and other small businesses are closing.
Alina Valeanu and
Andrei Zamfirescu, Senior Associates at bnt attorneys in CEE, Romania report on how insolvency procedures are affected due to the ongoing crisis
. Download the full story here.
May 2020 - Covid-19 and Insolvency Developments in Italy
Italy’s national lockdown in response to the Covid-19 health emergency has been in place since 9 March 2020. Several contingency rules aimed at containing the economic and financial impact of the related lockdown were quickly adopted, affecting various area of law related to business activity, as company and insolvency law. This Inside Story means to point out the most relevant changes involving insolvency law, on the premise that these provisions could be further modified or integrated due to the general uncertainty of the length (and after effects) of the emergency situation.
Domenico Benincasa, Partner, Studio Legale Benincasa Nervi e Pelligrini, Rome;
Francesca Burigo, Professor, Faculty of Law, Università Ca’ Foscari, Venice and
Carlo Ghia, Partner, Studio Legale Ghia, Rome r
eport for INSOL Europe. Download the full story here.
April 2020 - Relief for Directors in the Coronavirus Crisis: UK Developments and Lessons for Cyprus
Whilst the UK is taking proactive measures to aid ailing companies and businesses from the aftermath of the coronavirus outbreak, one cannot help but wonder what the Cyprus government will do since the Examinership regime introduced as part of the rescue culture in 2015, has failed miserably. The UK may have been slower off the mark than many other countries in their fight against coronavirus, nevertheless, the authorities have now ramped up the speed and scale of the measures being implemented to protect their national health system and the economy.
Chris Iacovides, Director, CRI Group; Certified Public Accountant; Licensed Insolvency Practitioner, UK, Cyprus and Romania and
Andri Antoniou, Director, CRI Group, Cyprus; Solicitor (non-practising), England and Wales; Licensed Insolvency Practitioner, Cyprus; Former Qualified Examiner, UK Insolvency Service report for INSOL Europe
. Download the full story here.
March 2020 - Light at the end of the Debt Tunnel in Finland
No claim stands forever automatically, and debtors are protected by a kind of prescription (limitation) period set by legislation. Through the passage of time, by prescription, creditors lose their right to collect the receivables owed to them. The prescription period may refer to the time limit in which the material receivable expires or to a procedural time limit within which the creditor must file a claim in court. Usually, the material time limit can be interrupted by instituting formal or informal proceedings or notifications against the debtor before the prescription time lapses. The effect of an interruption is a new or an extended prescription period. The creditor’s right to unlimited interruptions means a lifelong debt burden for a debtor.
To cure this distress, many countries in the European Union and elsewhere have adopted different kinds of debt adjustment procedures for private persons. However, these proceedings may be time consuming and they are not suitable for all, including debtors with irregular incomes or entrepreneurs who may have difficulties in implementing the repayment plan, writes
Tuula Linna, Professor, Faculty of Law, University of Helsinki, Finland.
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February 2020 - Examinership: The Irish Rescue Process 30 Years Later
In 1990, Ireland introduced a rescue process which reflects all of the main components of the Preventive Restructuring Directive (1023/2019). This procedure was originally contained in a larger scheme of corporate law reform and consolidation designed in the late 1980s, but the rescue process was extracted and passed hurriedly in September 1990 to respond to a crisis in the Irish beef industry. This first outing of what was called the Examinership process was a spectacular success leading to the rescue of the Goodman Group. The remainder of the original legislation was passed later in 1990. The Examinership process contains all of the key features in the Directive as explained by
Irene Lynch Fannon, Professor of Law, University College Cork, Ireland
. Download the full story here.
January 2020 - Georgian Insolvency Law is on the Move
Georgia’s insolvency system is facing significant changes today. The new draft law is ready to be enforced and will completely change the system. The current Insolvency Law 2007 is appreciated as primarily oriented towards a rapid liquidation of insolvent corporate entities and private entrepreneurs’ businesses with the subsequent distribution of remaining assets amongst the creditors. The number of insolvency cases dealt with by the local courts is fairly limited, most probably due to insufficient assets in the insolvent entities to cover the costs of the insolvency procedure. The law leaves many aspects of insolvency procedures either unclear or unregulated.
Nana Amisulashvili, Chair, BRIPA (Business Rehabilitation and Insolvency Practitioners Association), Georgia, reports on the need for reform and the bold approaches of the new law.
Download the full story here.