COVID-19 urges legislators to adapt insolvency legislation
CERIL Executive publishes Statement on COVID-19 and insolvency legislation
The COVID-19 (corona) virus has reached pandemic status. It currently spread over the world is expected to infect a majority of all people within the next month(s), according to health experts. The medical urgency justifies the current extraordinary measures taken by many governments. At the same time, these measures also have devastating effects on businesses.
The Executive of Conference on European Restructuring and Insolveny Law (CERIL) is deeply concerned with the ability of existing insolvency legislation to provide adequate responses to the extremely difficult situation in which many companies may find themselves in the COVID-19 (corona) crisis. In a CERIL Executive Statement, it calls upon EU and European national legislators to take immediate action and adapt insolvency legislations where necessary in light of the current extraordinary economic situation and to prevent unnecessary bankruptcies of entrepreneurs.
The Executive of CERIL recommends the following two steps to be taken immediately by European national legislators:
- Step 1: Suspend the duty to file for insolvency proceedings based on over-indebtedness
- Step 2: Respond to the illiquidity of businesses
In addition, the EU and national legislators are urged to consider measures regarding:
- Interim financing;
- Suspending the duty to file based on the inability to pay;
- ‘Hibernation’ for (small) businesses, and
- Supporting the livelihood of entrepreneurs and their employees.
The full CERIL Executive Statement 2020-1 is attached and can also be
downloaded here. We hope it may assist legislators in this urgent corona crisis, also in taking (further) measures regarding adapting insolvency legislation.
