UPDATED Global Insolvency Report: Impact of Covid-19 on Insolvency Laws

The most notable changes to our updated guide this week are those impacting Japan where the period of the expanded Employment Adjustment Subsidy has not been extended beyond April 30 2021 and Germany, where the Suspension of the Obligation to File for Bankruptcy expires on 30 April 2021.

All other jurisdictions remain largely the same.

Please click here to see our updated guide.

Updated: Guide To Financial Support Measures Across Europe And The Middle East

Our most recently updated guide includes updates for the Czech Republic, France, UK, Italy, Germany, the Slovak Republic and the UAE, notably:

Czech Republic

There have been updates to:

  • The deadline for submitting applications for the COVID-lease programme has now expired.
  • A new COVID-2021 programme has been introduced.
  • A new COVID Uncovered Costs programme has been introduced.
  • There has been an update to the Compensation Bonus Scheme.


A new state-guaranteed equity loans and subordinated bonds system has been introduced that is available to small and medium-sized enterprises and intermediate-sized enterprises (provided they meet certain criteria).


Updates regarding improvements to Bridging Aid III and the new equity grant that will be provided under Bridging Aid III.


There has been an update to the Revolving Fund for exports.

Slovak Republic

There have been updates to:

  • The Deferral of Instalment Payments
  • The Anti-Corona Guarantee Programme 2 – State guarantee for loans provided by commercial banks
  • The state’s contributions to cover salaries
  • The state’s contributions to salaries
  • The state’s contributions to cover lost revenues
  • Contribution to income
  • Social benefits for persons in quarantine or isolation
  • Temporary protection from insolvency until 31 December 2020 and from 01.01.2021

United Arab Emirates 

  • The ADGM Support Initiatives expired on 25 March 2021 and have not been extended.
  • There are also updated regarding the Emirate of Sharjah Economic Stimulus Package.


There have been significant updates and extensions to various schemes (please see the guide for more information).

You Shall Not Pass – Bankruptcy Court in Intelsat Grants Debtors’ Motion to Seal Hearing

On April 19, 2021, the United States Bankruptcy Court for the Eastern District of Virginia granted a motion (the “Seal Motion”) filed by the Intelsat S.A. debtors (the “Debtors”) to seal the hearing on the Debtors’ motion to extend exclusivity and motion to compel plan mediation.  Although bankruptcy courts routinely grant motions to seal content included in pleadings, it is uncommon for a court to prevent certain parties, or the general public, from attending a hearing.  This article reviews the Debtors’ unusual request.

The Facts

Confidentiality has been of the utmost importance to the Debtors since their chapter 11 bankruptcy cases were filed on May 13, 2020.  In order to ensure that confidential information would not be jeopardized during plan negotiations and related discovery, the Debtors and key constituents entered into a confidentiality agreement in September 2020.  Subsequently, in December 2020 the Debtors negotiated and received court approval on a protective order guarding against the disclosure of confidential information.

Following these protective measures, the Debtors entered into a plan support agreement with certain creditors and filed a proposed plan of reorganization on February 12, 2021.  However, not all creditors consented to the proposed plan – of note, certain creditor groups holding several tranches of the Debtors’ prepetition notes formally objected to the proposed plan.  The Debtors engaged in negotiations with these creditor groups, and the Debtors were forced to file a motion to extend exclusivity and a motion to compel plan mediation when plan negotiations stalled.

Objections to both the motion to extend exclusivity and the motion to compel plan mediation were filed, and the Debtors filed their Seal Motion in which they argued that they needed to include sensitive, non-public information in their reply briefs and requested (a) that replies filed in support of the motions be sealed, and (b) that the hearing on the motions should be sealed.  In other words, only key creditors and parties in interest would be permitted to listen to the hearing on Zoom.

Legal Justification

Pursuant to section 107(b)(1) of the Bankruptcy Code, courts may protect entities from potential harm that might result from the disclosure of certain confidential information, specifically “trade secret[s] or confidential research, development, or commercial information.”  Courts have held that protection may be necessary if the movant proves that one of these confidential information categories needs to be protected.

Section 107(b)(1) confidentiality protection is often based upon the equitable powers granted pursuant to section 105(a) of the Bankruptcy Code, which gives courts the power to “issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title.”  In addition, Bankruptcy Rule 9018 sets forth procedures for a party to protect its confidential information by providing that “the court may make any order which justice requires … to protect the estate or any entity in respect of a trade secret or other confidential research, development, or commercial information.”

The UST Objection

The Office of the United States Trustee (the “UST”) objected to the Debtors’ request to seal the entirety of the hearing related to the exclusivity and plan mediation motions (importantly, not the Debtors’ request to redact its replies) on two grounds.  First, the UST asserted that there is a general presumption that court hearings should be public.  This commonsense argument focused on the Debtors’ willingness to seek relief under chapter 11 of the Bankruptcy Code in a court where court filings are typically open and available to the public.  Second, the UST suggested that sealing the entire hearing would likely be unnecessary and that the Court should therefore instead only seal those portions of the hearing that involved confidential information.

The Court’s Holding Granting the Motion to Seal

The Court overruled the UST’s objections and granted the Debtors’ request to seal the hearing to the extent confidential information would be discussed.  In granting the Seal Motion, the Court noted that it would be cumbersome and time-consuming to flip the hearing from public to private, and vice versa, on the electronic Zoom platform.  And, although the hearing was sealed, the Court instructed the Debtors and the other parties that were permitted to attend to submit a redacted transcript of the hearing as soon as possible.  Furthermore, during the second day of the hearing, the Court opened up a portion of the hearing to the general public once confidential information was no longer at risk of being disclosed.  Ultimately, the Court granted the Debtors’ motion to extend exclusivity and motion to compel plan mediation.


Filing a motion to seal a pleading or a portion of a pleading is relatively common practice in bankruptcy proceedings.  However, prohibiting all parties from simply attending a court hearing is a bit unusual.  Nevertheless, the Intelsat case, as well as the earlier decision in In re Health Diagnostic Laboratory, Inc., No. 15-32919 (KRH) (Bankr. E.D. Va. Mar. 24, 2021), demonstrate that such relief is achievable.

Nonetheless, given the public access concerns raised by the UST, counsel and their clients should understand that such relief may be the outlier.  Indeed, counsel is wise to educate their clients who are contemplating filing for bankruptcy that such filings will make many of the company’s, and their directors’ and officers’, dealings public knowledge.


The “Debt Respite Scheme” Regulations: More Delay for UK Landlords

Town HousesFrom 4 May 2021 individuals will be able to apply for a moratorium that will provide a breathing space from creditor action.  Our property litigation team have produced this alert considering the impact of  the new regulations and what they mean for landlords.

Whilst the regulation will primarily impact those involved in residential lettings, the alert is also relevant to commercial landlords who let property to individuals.

UK Government Consults With Landlords and Tenants on Potential Options for Dealing With Rent Arrears

Empty street in Marylebone district, London, EnglandThe UK government has launched a consultation inviting views from stakeholders on options for dealing with rent debt when the existing prohibitions on forfeiture, CRAR proceedings and winding-up petitions end on 30 June 2021.

Responses to the consultation can be made here and although participation is voluntary, completing the survey will ensure that the government’s decision as to how it will manage the exit route following the expiry of the temporary measures at the end of June will reflect the interests of many, rather than the few.

Our alert sets out in more detail the information that the UK government is seeking views on, what landlords and tenants should be doing now, and how our team can help you.

Should you wish to discuss the impact of this on your business, please contact one of our team of specialists, who will be able to assist in understanding:

  • How to manage existing rent debt with your landlord or tenants in accordance with the Code of Practice
  • The impact on your business if your landlord or tenant will not negotiate
  • The impact of the options proposed by the government on your business, and how to respond to the survey

Pre-Pack Sales to Connected Parties – FAQs (UK)

From 30 April 2021, an administrator will be unable to complete a sale of a substantial part of a company’s property to a connected person without either the approval of creditors or an an independent written option.

Our new alert considers the impact of the new regulations in practice, which apply to both pre-packs and post-packs that take place eight weeks of an administrator’s appointment answering questions such as:

  • How does the administrator assess whether the evaluator has the relevant knowledge, experience and independence?
  • What is a substantial disposal?
  • What is the administrator’s liability for breach of the regulations?
  • What if there is more than one sale?
  • Who is a connected party?


Updated: UK Business Viability Guide – understanding director risks and challenges

With the UK taking positive steps towards re-opening the economy, businesses will start to see the true impact that lockdown restrictions (and the lifting of those restrictions) have on supply and demand.

The UK government has continued to support UK businesses including,  most recently, extending the prohibition on winding up petitions and the forfeiture moratorium, but there are still difficult decisions that directors need to make over the coming months.

For directors, one of the most difficult challenges is ensuring compliance with their directors’ duties when making decisions about the future of the business.  If the business is at risk, their own personal liability might also be at risk.

In light of the unlocking roadmap and extended support measures we have updated our business viability guide to assist directors in understanding risk and upcoming challenges: cash requirements, financial pressure points, employees, tax and directors’ duties.

UK Insolvency Protection Laws Extended – Where Are We Now?

The Corporate Insolvency and Governance Act 2020 introduced a number of temporary changes to UK insolvency laws last year.  Those changes, together with other measures such as the moratorium on forfeiture proceedings have recently been extended, we assume, to avoid the perceived cliff edge of insolvencies that might follow if such measures are brought to an end abruptly.

As with many of the UK government announcements and legislative changes, these have been announced in a piecemeal fashion and it is not always easy to keep track of what has been extended and until when.  Below is a summary of the position as it currently stands:

  1. The exemption from the ipso facto regime (preventing a small supplier from terminating a contract for insolvency related reasons) has been extended until 30 June 2021 (see our updated quick guide).
  2. Temporary changes to the criteria for obtaining a corporate moratorium that allow a company that has been subject to a winding up petition, CVA, moratorium or administration in the past 12 months are extended until 30 September 2021 (see our updated quick guide).
  3. The temporary restrictions affecting winding up petitions have been extended until 30 June 2021 (see our previous blog for more detail). This does not mean that a winding up petition cannot be presented, but the petitioner will have to overcome the ‘coronavirus test’ in order to proceed with a petition (see our previous blogs here and here that explain how the courts have interpreted this test).
  4. The temporary suspension of the wrongful trading provisions is also extended until 30 June 2021.
  5. The prohibition on forfeiture proceedings has also been extended until 30 June 2021 (for further reading about the impact of this on landlords see our blog)

Further reading

You can access our quick guide to the restructuring plan here.

The Coronavirus Test: Indirect ‘financial effect’ of coronavirus could be sufficient to defeat a winding up petition (UK)

Following the UK Government extending the restrictions on winding up petitions until 30 June 2021 it is useful to note two recent cases that have considered the coronavirus test that currently applies to winding up petitions.

In the first case Newman v Templar Corp Ltd [2020] EWHC 3740 (Ch) heard before Christmas but only recently reported, the judge took the view that the low threshold test for determining whether coronavirus had had an impact on the financial position of the company was to be taken as settled law.  For more details about that the coronavirus test and the case see our previous blog here.

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Pre-Pack Administrations: How Do Administrators Evaluate the Evaluator? (UK)

With fairly swift measure the UK House of Commons approved the ‘pre-pack regulations’ confirming that, with effect from 30 April 2021, before a pre-pack sale can complete creditor approval or an independent written report from an evaluator will be required.

The detail about, the now mandatory referral process, can be found in our previous blogs.

Who will the evaluator be?

This remains one of the biggest unknowns.

The only requirements in the regulations about identify, are that the person is satisfied that they have the relevant knowledge and experience, are independent and hold professional indemnity insurance.  There are a number of persons who are excluded from acting, although fairly obvious, such as those people who have been convicted of dishonesty, made bankrupt or the administrator themselves.

Although the connected person has to obtain the evaluator’s report  the insolvency practitioner (IP) also has to be comfortable that the evaluator has the relevant knowledge and experience – which is likely to pose a few questions for an IPs risk and compliance team.

This should hopefully be an easy risk to manage if, as the government expects, lawyers, accountants, former members of the pre-pack pool and other IPs will take on the role but for someone outside this group, who does have the requite knowledge and experience will they (a) be able to get the professional indemnity insurance to enable them to meet the criteria to act, and (b) meet an IPs internal risk and compliance requirements.  We will have to wait and see. Understanding how an IPs professional body views this role will also be key.

This is also unlikely to be the last we hear on the question of pre-packs, if unscrupulous people try to ‘game the system’ to their advantage.

Some measures have been included in the regulations to try and address concerns, such as to prevent opinion shopping, but if in practice the regulations do not address the perceived lack of transparency and creditor confidence because the rules are flexed in a way that allows unscrupulous directors and evaluators to game the system, then the government will consider whether further change is necessary, or whether pre-packs should be scrapped entirely.    The latter would be disappointing, because a pre-pack is a valuable restructuring tool, and for the majority of the insolvency profession ensuring that remains an option for business rescue will be important.