Our tracker contains an overview of changes made in light of the Covid-19 outbreak which impose restrictions on creditor rights, relax debtor obligations to file for insolvency or concern other insolvency-related issues.
The tracker is intended merely to highlight legal issues and not to be comprehensive, nor to provide legal advice.
Should you have any questions on the issues reported here or on other areas of law, please contact one of your regular Linklaters contacts.
Explore each jurisdiction for further information.
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
The Department of Trade and Industry issued regulations to:
These remain in place and have not been revoked. |
No restrictions on creditor insolvency filings have been implemented. |
No formal suspension of insolvency filing duties has been implemented as yet. Furthermore, restrictions on access to courts have been lifted.
A general extension was provided by the Companies and Intellectual Property Commission for business rescue proceedings which commenced, but which did not complete the procedure as stated with in section 129 of the Companies Act, 71 of 2008 (the Act), until 30 April 2020. The time periods set out in the Act did not run during the period 27 March 2020 until 16 April 2020 for business rescue proceedings that have not yet commenced. All timing has now reverted to normal.
CIPC issued a notice stating that it will not invoke its powers under section 22 of the Act. Section 22 of the Act empowers CIPC to issue notices to a company, where it has reasonable grounds to believe that the company is trading or carrying on business recklessly, with gross negligence or for a fraudulent purpose. In the circumstances, where companies are temporarily insolvent and still carrying on business or trading and where the reason for this is due to business conditions caused by the Covid-19 pandemic, CIPC will not issue a section 22 compliance notice. The notice issued by CIPC in this regard will lapse within 60 days after the declaration of a national disaster has been lifted. |
The national state of disaster has been extended to 15 September 2021. The country was placed on Adjusted Alert Level 3 from 29 December 2020 (up from Alert Level 1). |
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No restrictions on creditor rights as yet. |
The temporary inflation of the minimum threshold for creditors to issue a statutory demand on a company (from $2,000 to $20,000) has now lapsed as at 31 December 2020 |
N/A - no obligation, though delay can give rise to liabilities.
On 23 March 2020, the Commonwealth Government introduced a new insolvent trading 'safe harbour' comprising a six-month moratorium on insolvent trading liability for directors in respect of debts incurred "in the ordinary course of the company's business".
The 'safe harbour' has now lapsed as at 31 December 2020. |
The Treasurer has been given instrument making power to amend provisions of the Corporations Act 2001 (the Act containing the significant provisions regarding insolvency procedures and directors duties), to provide relief from, or modify, obligations under that Act. The power is intended to allow the Treasurer the flexibility to deal quickly with unforeseen circumstances arising from Covid-19, without the need for legislation with its attendant delay.The Federal Parliament has recently passed insolvency law reforms to introduce a new debt restructuring process for small businesses, similar to the US Chapter 11 bankruptcy model. |
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No restrictions on creditor rights as yet. |
No restrictions on creditor insolvency filings as yet. | N/A – no obligation and no concept of “wrongful” or “insolvent” trading (only fraudulent trading which is rare) | - |
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
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No suspension as yet |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No restrictions on creditor rights as yet.
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No binding restrictions on creditors’ rights "as yet".
However, on 7 April 2020, the Financial Services Agency (the "FSA") announced its requests to the financial institutions which includes the following:
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No binding restrictions on creditor insolvency filings as yet. |
No suspension as yet |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
The Covid-19 (Temporary Measures) Act introduced the ability for a non-performing party, during certain the prescribed periods, to obtain a temporary stay on certain all creditor actions for non-performance.
As of January 2021, this applies in respect of (amongst others):
in both cases, where, (i) amongst others the relevant obligations are due to be performed on or after 1 February 2020 under contracts entered into or renewed before 25 March 2020 and (ii)the inability to perform is to a material extent caused by a COVID-19 event. The relevant prescribed period for this stay will end on 31 March 2021. |
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There is no obligation to file for insolvency, though delay can give rise to liabilities for the directors. However, the draft law includes a temporary suspension of wrongful trading rules aimed at assisting directors to keep businesses going without the threat of personal liability – provided that debts are incurred in the ordinary course of business.
Directors remain criminally liable for fraudulently incurred debts. |
Client alert: |
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
(A) On 28 February 2020, the Bank of Thailand (“BOT”) has requested for cooperation from banks and financial institutions in order to urgently consider assisting qualified debtors that have been affected by the COVID-19 situation with pre-emptive funding and liquidity enhancement measures.
These measures are, among others,
(i) approving additional working capital loans to a business operator who has existing facilities with financial institutions to increase liquidity and facilitating financial institutions in providing such loans. For example, subject to conditions prescribed in the relevant regulations, the Ministry of Finance will compensate the financial institutions if the provision of such loans causes certain losses to the financial institutions; (ii) approving debt restructuring in accordance with the applicable guideline. For example, through extending payment terms for all types of credit facilities including packing credit or trust receipts, renewal/ maintenance of credit limit, conversion of a short-term loans to long-term loans, granting of temporary grace periods, reduction of interest, liquidated damages or fees and charges, reduction of interest rate (i.e. lower than the market rate), allowing repayment of principal before interest or any other measures as may be appropriate; (iii) further extending the repayment period for the debtors whose conditions are not suitable for debt restructuring; (iv) relaxing restrictions imposed on financial institutions to facilitate debt restructuring; and (v) temporarily suspending the computation of the overdue period in the event that the debtor and the creditor(s) have discussed and failed to mutually agree on the debt restructuring. In such a circumstance, each creditor shall be entitled to continue computing the overdue period commencing on the date immediately preceding the date of the first creditors’ meeting and disregarding the debt restructuring consideration period.
(B) The Thai Government has issued the Emergency Decree prescribing the financial support measures for SMEs affected by COVID-19 situation B.E. 2563 (2020) (the “Thai Emergency Decree”) which came into effect on 19 April 2020. The measures prescribed under the Thai Emergency Decree are, among others, (i) granting of soft loan through banks and special financial institutions to qualified SMEs for a period of 2 years together with the government’s partial subsidy to such qualified SMEs and (ii) granting of 6 months grace period for loan repayment to qualified SMEs.
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
Commercial banks have been instructed by the State Bank of Vietnam to issue internal rules and decide on restructuring debt repayment terms, exemption and reduction of interests and fees, and retention of debt groups for their customers affected by Covid-19 in accordance with the State Bank's regulations. Notable regulations of the State Bank include:
Other than above, no restrictions on creditor rights as yet. |
No restrictions on creditor insolvency filings as yet. |
No suspension as yet |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
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Any time limits that relate to the effects of the provisions regarding insolvency and the filing of a motion for bankruptcy shall be extended by the number of days between the date of filing the motion for bankruptcy and the last day on which the motion should have been filed under the general provisions. |
1) On 24 June 2020, a simplified restructuring proceeding (uproszczone postępowanie restrukturyzacyjne) entered into force.
2) On 11 August 2020, the Act on Granting Public Aid to Rescue or Restructure Entrepreneurs came into force. The act provides three types of public aid for enterprises in difficulties: rescue aid, temporary restructuring support and restructuring aid. |
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No restrictions on creditor rights. |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
As a reminder, where their purpose was to sanction breach of an obligation within a set period of time, acceleration or termination clauses provided in contracts (including loan agreements between a bank and a corporate) were deemed not to have commenced or taken effect if that period expired between 12 March 2020 and 23 June 2020 (included) (the "Protected Period").
Such clauses became effective again from 24 June (included) but only after the expiry of a ‘postponement period’ equivalent to: the time elapsed between 12 March 2020 (or, if later, the date on which the obligation arose) and the date on which the relevant obligation should have been performed, provided that the debtor had not performed its obligation in the meantime. The effectiveness of acceleration or termination clauses sanctioning the breach of an obligation (other than the payment of a sum of money) which were to be performed at a date beyond the end of the Protected Period, have also been postponed by a period equivalent to: the time elapsed between 12 March 2020 (or, if later, the date on which the obligation arose) and 23 June (included) (i.e. 104 days maximum). Note that the parties were entitled to waive or set aside these provisions. Note that all financial obligations and related financial collateral referred to in Articles L-211-36 et seq. of the French Monetary and Financial Code are expressly excluded from the scope of the suspension regime. Even though loans between a bank and a corporate do not fall within the scope of Articles L 211-36, it does mean that loan facilities granted to certain qualifying parties (e.g. credit institutions, public entities (établissements publics) and local authorities (collectivités territoriales) are excluded from the suspension regime.
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The temporary suspension and adaptation of the obligation to file for insolvency proceedings lapsed on 23 August 2020. |
The state of cash-flow insolvency triggers an obligation for the debtor’s legal representative to apply for the opening of reorganization or judicial liquidation proceedings within 45 days of the debtor becoming cash-flow insolvent, unless it has filed for (pre-insolvency) conciliation proceedings in the meantime. As noted in the previous column, since 24 August 2020, the ordinary statutory provisions and obligations in respect of cash-flow insolvency are back in force. |
Until 23 February 2021, or, as the case may be, 23 31 December 2021:
Further amendments of French insolvency law have been introduced by Ordinance No 2020-596 and continued by Law No 2020-1525 and are still in force:
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
Temporary suspension of the landlord’s right to termination of leases (commercial and residential) due to rent arrears up until 30 June 2022, if: (i) the arrears were accumulated between 1 April and 30 June 2020; and (ii) the rent arrears were caused by the Covid-19 pandemic.
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Insolvency petitions filed by a creditor between 28 March and 28 June 2020 could only have been successful, if the insolvency of the debtor occurred until and including 1 March 2020. |
Temporary suspension of the duty to file for insolvency (usually within 21 days of cash-flow insolvency and/or over-indebtedness) applied until 30 September 2020. Only for the reason of over-indebtedness (and the debtor is not illiquid at the same time) the suspension of the filing obligation was extended until 31 December 2020 unless:
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In addition to the suspension of filing duties, the law also clarifies the impact of the suspension in respect of the liability of the management:
As of 1 January 2021 a new German restructuring law came into force implementing the preventive restructuring directive (EU) 2019/1023. The draft of the new German law foresees various pre-insolvency restructuring tools available for companies in the stage of impending illiquidity. Hereby, the German legislator intends to provide a seamless transition from the aforementioned Covid19 related suspensions to the new restructuring law and to create a stabile legal framework for debtors, creditors and other involved stakeholders.
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
SMEs: moratorium on loans
Law Decree no. 18 issued on 17 March 2020, converted into the law no. 17 of 24 April 2020 (so called “Cura Italia”), as amended pursuant to the Law of 30 December 2020 No.178 provides that:
These measures apply only to small and medium-sized companies (so called “SMEs”) whose exposure is not classified as non performing exposure as at the date of filing of the relevant request, and are automatically extended pursuant to the Law of 30 December 2020 No. 178 to the SMEs which already requested the moratorium pursuant to the Law of 24 April 2020 no, 17.
Law Decree no. 23 issued on 8 April 2020 (the “Liquidity Decree”), converted into the law 5 June 2020 No. 40, provides that:
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No restrictions on creditor rights. |
No restrictions on creditor bankruptcy filings. |
• A law dated 25 November 2020 has suspended the statutory requirement for directors to file for bankruptcy proceedings (aveu de faillite) within one month of the Luxembourg bankruptcy conditions being cumulatively met. The aforementioned obligation is suspended until 30 June 2021 (included). |
Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? |
Other notes |
No restrictions on creditor rights as yet.
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No restrictions on creditor insolvency filings as yet.
A legislative proposal has been submitted which establishes a temporary suspension on i.a. insolvency petitions, See under ‘Calling defaults, acceleration, termination or enforcement’. |
N/A - no obligation, though delay can give rise to liabilities. |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
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No restrictions on creditor insolvency filings as yet.
Suspension of judicial surrender procedures for the family home. |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
1. Spanish government-ordered moratoria (moratoria legal):
(i) natural persons who are professionals or entrepreneurs (with regard to the premises where their professional activity is carried out); and
2. Private payment moratoria (for mortgages and non-mortgage loans) (moratoria convencional):
(i) changing the repayment calendar, without changing the termination date, or
(ii) extending the termination date by the same number of months as the moratorium lasts.
3. Moratorium on mortgage payments within the tourism sector: |
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Other measures related to pre-insolvency and insolvency (we highlight the key points):
Measures related to the obligation for winding-up:
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
No restrictions on creditor rights as of yet. |
No restrictions on creditor insolvency filings as of yet. |
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Covid-19 related restrictions on creditor action?
Calling defaults, acceleration, termination or enforcement; |
Covid-19 related restrictions on creditor action?
Making insolvency filings |
Suspension of director/company insolvency filing duties? | Other notes |
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