COVID-19: International Restructuring & Insolvency update

As the Novel coronavirus (COVID-19) pandemic continues to spread across the globe, people and businesses are facing unprecedented challenges, both immediate and strategic. Governments in various jurisdictions have announced various measures to try to alleviate the distress caused by the numerous issues that have arisen and continue to arise, particularly around cashflow and employees.

Bird & Bird's International Restructuring & Insolvency Group has collated the various government responses from its offices around the world and a brief summary of each is set out behind the links below. 


Key local contact: Lyle Abel

The Coronavirus Economic Response Package Omnibus Act N0 22 of 2020

On 23 March 2020, the Australian Parliament passed the Coronavirus Economic Response Package Omnibus Act N0 22 of 2020 (the Act), which is designed to provide an economic response to the effect, on Australia, of the coronavirus pandemic sweeping the world by stimulating and supporting economic activity.

In relation to the Australian insolvency regime the Act made some significant changes to the relevant laws as follows.

  1. Temporary relief for financially distressed individuals and businesses

    To avoid unnecessary bankruptcies and insolvencies, the Act provides a safety net to help businesses to continue to operate during a temporary period of illiquidity, rather than enter voluntary administration or liquidation; and a safety net to individuals to assist them with managing debt and avoiding bankruptcy.

    The amendments temporarily increase the minimum amount of debt required to be owed before a creditor can initiate involuntary bankruptcy proceedings against a debtor from $5,000 to $20,000. The amendments also temporarily provide debtors more time to respond to a bankruptcy notice – the period is extended from 21 days to six months; and temporarily extends the timeframe in which a debtor is protected from enforcement action by a creditor following presentation of a declaration of intention to present a debtor’s petition – the period is extended from 21 days to six months. 

    The amendments increase the statutory minimum for a creditor to issue a statutory demand to a debtor from $2,000 to $20,000. This raises the thresholds for creditor demands that can push businesses into insolvency. The amendments also temporarily provide debtors more time to respond to a statutory demand – the period is extended from 21 days to six months.

  2. Temporary relief for directors from duty to prevent insolvent trading

The Act provides temporary relief for directors from their personal duty to prevent insolvent trading. The temporary relief is achieved by the suspension of the obligation on the directors under the Corporations Act to prevent insolvent trading, where a debt is incurred in the ordinary course of the company’s business during the period from 24 March to 23 September 2020.

This amounts to a six-month period in which a new (second) safe harbour from the directors’ duty to prevent insolvent trading applies. 

A director may rely on the new temporary safe harbour in relation to a debt incurred by the company if: 

• the debt is incurred in the ordinary course of the company’s business; 
the debt is incurred during the six month period starting on the day the new law commences, or a longer period as prescribed by the regulations; and
the debt is incurred before any appointment of an administrator or liquidator of the company during the temporary safe harbour application period.

A director is taken to incur a debt in the ordinary course of business if it is necessary to facilitate the continuation of the business during the six month period that begins on commencement of the law. This could include, for example, a director taking out a loan to move some business operations online. It could also include debts incurred through continuing to pay employees during the Coronavirus pandemic. It probably will not apply to debt incurred, for example, as a means to refinance the company. The director would likely look to the 'old' safe harbour provisions for protection in that event.

The regulations may prescribe circumstances in which the temporary safe harbour is taken never to have applied in relation to a person and a debt.

A person wishing to rely on the new temporary safe harbour in a proceeding in which unlawful insolvent trading is alleged bears an evidential burden in relation to that matter. It is encumbent on directors to maintain proper records in relation to the decisions taken under this regime.

Similarly a holding company may rely on the temporary safe harbour for insolvent trading by its subsidiary if it takes reasonable steps to ensure the temporary safe harbour applies to each of the directors of the subsidiary, and to the debt, and if the temporary safe harbour does so apply. The holding company would bear the evidential burden in relation to these matters.

Directors should be aware that the temporary safe harbour measures do not provide relief from director's duties owed to the company itself and third parties under other provisions of the Corporations Act and under the Common Law. Accordingly, directors must continue to mitigate the risks of the company falling into insolvency by taking reasonable steps to inform themselves about the company’s current and ongoing financial viability as well as assessing the impact of incurring any further debts.

Although providing relief to directors for the consequences of insolvent trading, the company will continue to remain liable for debts incurred.

Whilst the measures may be a panacea for rescuing the many companies that may struggle to continue in current circumstances, we see the following issues which may arise in rushing to enact such measures, in particular, regarding directors' duties and potential liability.

An exemption from director liability for insolvent trading may well protect directors of companies with genuine short-term issues but long-term viable businesses, but it may also have the effect of artificially supporting companies that would otherwise have been a candidate for failure regardless of the economic circumstances. The removal of liability can be a shield for those who may be reckless as to their directors’ duties, adversely impacting the rights of their creditors and employees.

Australia already has in place laws that operate as a ‘carve-out’ from the director insolvent trading provisions, designed to permit directors to take measured risks to save an ailing company, and thereby better protect creditors and employees – the ‘safe harbour’ regime enacted in 2017.  This regime has the advantage that it is only available to companies with diligent, financially well-informed directors that have demonstrated ongoing compliance with requirements to meet employee entitlements and tax reporting obligations.  Accordingly, distressed companies can still avail themselves of the original safe harbour provisions to pursue a course of action reasonably likely to lead to a better outcome than administration or liquidation where that is practically achievable. 

Creditors of companies trading in these circumstances should be aware of the increased trading risk as well as the voidable transaction risk (in particular the risk of payments received by creditors subsequently being set aside as preferences) if ultimately those companies become insolvent but continue to trade in reliance on these provision. 

It is more important than ever for directors assessing their options in the current economic climate to seek professional advice so that decisions can be made that will best protect the company, its creditors and employees – whether that decision is that the criteria for the safe harbour provisions apply and a plan can be put in place that is reasonably likely (objectively) to effect a “better outcome” than immediate resort to a formal insolvency process, or, that the appointment of an insolvency practitioner as an administrator will best serve a company that may be viable in the medium to long term.

Other provisions affecting Australian corporate life touched on by the Act include the following:

3. Instant asset write offs

The Act includes provisions intended to complement the existing instant asset write off for small and medium sized business entities so supporting business investment over the period from the announcement date to 30 June 2020.

The tax law is amended to increase the cost threshold below which small business entities can access an immediate deduction for depreciating assets and certain related expenditure (instant asset write-off) from $30,000 to $150,000 from 12 March 2020 to 30 June 2020.  The instant asset write-off is available to entities with an aggregated turnover between $10 million and $500 million (up from the existing cap of $50 million). 

4. Backing business investment

The Act provides an incentive for businesses with aggregated turnover of less than $500 million in an income year to make capital investments by allowing them to deduct the cost of depreciating assets at an accelerated rate so stimulating and supporting economic activity, and enhancing their future productive capacity. 

The accelerated rate of deduction will help provide these businesses by boosting cash flow from their capital investments.

5. Boosting cash flow from employers

The Cash Flow Boost Bill is a key part of the response to the impact of the Coronavirus. It provides for payments to support employers and encourage the retention of employees through any downturn.

The legislation provides that the Commissioner of Taxation must make cash flow boost payments to eligible entities in two tranches. The first cash flow boost payments are required to be made to an eligible entity for a period ending from March 2020 to June 2020 where the entity notifies the Commissioner of an amount it has withheld in certain prescribed circumstances. Eligible entities will receive a minimum cash flow boost payment of $10,000 in the first period for which they are eligible. Entities will receive further amounts, based on the amount withheld, up to a maximum total of $50,000.

The Commissioner must also make the second cash flow boost payments to an entity for a total amount equal to the amount of the first cash flow boost payments to which the entity is entitled. The second cash flow boost payments will generally be made on lodgement of the activity statement containing the GST return of the entity for the period.

6. Financial framework regulations - aviation sector

The Financial Framework Regulations have been amended including establishing legislative authority for Government spending on a measure to provide financial assistance to participants in the Australian aviation sector to assist with the impact on the sector of the Coronavirus.  This is a temporary financial relief package for Australian airlines and other aviation sector participants. 

7. Providing flexibility under the corporations act

The Act amends the Corporations Act to establish a temporary mechanism to provide short-term regulatory relief to classes of persons that, due to the Coronavirus, are unable to meet their obligations under the Corporations Act or the Corporations Regulations.  The mechanism is temporary and will be operative for six months only. It also provides for short-term regulatory changes to facilitate continuation of business or mitigate the economic impact of the Coronavirus. 

8. Guarantee of lending to small and medium enterprises

The SME Lending Guarantee Bill gives effect to the Government’s commitment to enter into risk sharing agreements with financial institutions to ensure that credit continues to flow to SMEs so that SMEs can continue to meet their immediate financing needs during the uncertain economic conditions caused by the Coronavirus.

The SME Lending Guarantee Bill provides that the Minister may, on behalf of the Commonwealth, grant a guarantee to a financial institution in connection with loans made, or to be made, by the financial institution if granting the guarantee is likely to assist in dealing with the economic impacts of the Coronavirus.

9. Australian business growth fund

The Business Growth Fund authorises investment by the Commonwealth in the Australian Business Growth Fund and appropriates $100 million for that purpose.

A challenge for SMEs seeking to grow can be access to capital. Banks are reluctant to finance start-ups given the high risks involved. Entrepreneurs found it difficult to borrow more than around $100,000 on an unsecured basis to support their day-to-day trading activities. In addition, medium-sized businesses reported that it was hard to obtain additional finance once they have pledged all of their real estate as collateral. As a result, many entrepreneurs delay expanding their businesses until the expansion can be funded from retained profits. 

The Government will help SMEs grow by co-investing with other financial institutions to establish an Australian Business Growth Fund that will provide equity finance to SMEs across a range of industries and locations.  The Government has extended the intended use of the Australian Business Growth Fund to enable an increased availability of equity finance (as opposed to debt finance) for SMEs during the economic impact of the Coronavirus.

10. Assistance for severely affected regions

The Government has set aside $1 billion to support regions, communities and industry sectors most severely affected by the Coronavirus. The funds will be available to assist during the next few months and over the year ahead to ensure these communities are well placed to recover from the economic effects of the Coronavirus.

11. Structured finance support

The Structured Finance Support Fund, initially consisting of $15 billion, will enable the Government to ensure continued access to funding markets impacted by the economic effects of the Coronavirus, and to mitigate impacts on competition in consumer and business lending markets resulting from the Coronavirus. In particular, this will ensure smaller lenders can maintain access to funding, by the Government making targeted investments in structured finance markets.

The focus of the Fund’s activities will be investing in securitised loans, including residential mortgages, written by smaller lenders, through either warehouses or the term market. This will support the ability of smaller lenders to continue to issue new loans in the current economic conditions resulting from the impact of the Coronavirus; and obtain funding from markets at a competitive price. 


Key local contact: Cedric Berckmans

No new Belgian legislation in relation to corporate restructuring and insolvency has been implemented following the outbreak of the Coronavirus. However, it is only on 17 March 2020 that a Belgian government was formed, which was impossible since the elections of May 2019. This new "emergency" government has one sole task: to deal with the outbreak of the Coronavirus and its consequences. It is therefore to be expected that new legislation may still be adopted to adapt Belgian insolvency laws to the new circumstances.

The present government initiatives remain limited to the following support measures:

  • Premiums (depending on the region) for companies in certain sectors affected by a complete closure following the outbreak of COVID-19.

  • Postponement of the filing deadline for corporate income tax, legal entities income tax and non-resident tax returns.

  • Postponement of the filing deadline for monthly and quarterly VAT returns.

  • Extension of the deadline for annual VAT-listing.

  • Deferral of payment of personal income tax, corporate income tax, legal entity income tax and non-resident income tax.

  • Deferral of payment of property tax.

  • Employers may request the social security services for a deferral of payment of the social security contributions regarding the first and second quarter of 2020.


Key local contacts: John Shi / Andrew Robinson

The Chinese government has taken a wide range of measures to combat COVID-19 and to help businesses of all sizes. These measures include:

Liquidity release:

The People’s Bank of China (PBoC) has freed up RMB 2.25 trillion funds since February via cutting the reserve requirements for banks, encouraging the banks to lend to companies affected by the COVID-19 outbreak. Another RMB 500 billion through refinance and rediscount was offered to banks to finance businesses. 

Special loan and fiscal discount policies for targeted businesses:

PBoC has provided RMB 300 billion loan funds earmarked for assisting targeted businesses that are playing a vital role in combatting COVID-19. These targeted businesses typically include companies manufacturing medical equipment/materials, essential goods and produces, and companies transporting these goods and materials during the COVID-19 outbreak. Preferential interest rates are offered to the targeted businessesranging between 2.4% and 3.15%. In addition, the Ministry of Finance will discount 50% of interest costs for no longer than one year, leaving the actual interest rate for targeted businesses no higher than 1.6%.  

The list of the targeted businesses has been prepared jointly by the Ministry of Finance, the National Development and Reform Commission and the Ministry of Industry and Information Technology to ensure businesses qualify to benefit from this policy.

Fiscal and tax measures for businesses:

  1. For businesses that are affected by COVID-19 disproportionally hard (e.g. transportation, catering, accommodation, and tourism), the loss carry-forward period is extended from 5 years to 8 years;

  2. Taxpayers are exempted from value-added tax on income derived from public transportation services, living services (e.g. catering/restaurants, accommodation, education, medical services, tourism), and courier delivery of residents' essential supplies;

  3. Civil aviation enterprises are exempted from the civil aviation development fund;
  4. Financial support for domestic and foreign airlines operating international passenger flights between and from domestic destinations and overseas destinations includes a reward of RMB 0.0176 per seat km for a total flight and a reward of RMB 0.0528 per seat km for a solo flight.
  5. For loans granted to small businesses from banks, the interest rate for central bank lending is reduced from 2.75% to 2.5%;
  6. From March 1 to May 31 2020, small-scale value-added taxpayers (including self-employed businesses and small enterprises) in Hubei Province will be exempted from VAT. The VAT rate for small-scale value-added taxpayers outside Hubei Province will be reduced from 3% to 1%.

Measures to help resume work and production:

  1. The Ministry of Finance, in co-ooperation with relevant departments, has issued the “Notice on Periodic Reduction and Exemption of Enterprise Social Insurance Fees” (Ministry of Human and Social Development [2020] No. 11) to guide local governments in implementing the periodical reduction and exemption of social insurance policies. Beginning in February 2020, small and medium enterprises outside Hubei provinces may be exempted from basic endowment, unemployment and work injury insurance (hereinafter referred to as the three social insurances), and the exemption period shall not exceed 5 months; for large enterprises (excluding government agencies and institutions) outside Hubei provinces, the premiums for three social insurances will be halved, and the reduction period shall be no more than 3 months. Beginning in February 2020, all enterprises (excluding government agencies and institutions) in Hubei Province will be exempted from the payment of the three social insurances, and the exemption period will not exceed 5 months.

  2. For companies facing difficulties in resuming production, the payment of three social insurance premiums can be deterred for no less than 6 months without penalty. 

Post COVID-19: new infrastructure construction:

Going forward, in order to boost a weaker economy suffered from COVID-19, apart from traditional infrastructure projects, the Chinese government has proposed increased investments in “new infrastructure construction” in recent high-level meetings convened by the Standing Committee of Political Bureau of the Central Committee of the Chinese government. “New infrastructure construction” was a concept first introduced in 2018 and refers to infrastructure construction that focuses on science and technology, which mainly includes 5G infrastructure, UHV, intercity high-speed railway and intercity rail transport, new energy vehicle charging piles, big data centers, AI, and industrial internet. It is believed that “new infrastructure construction” will be a new stimulus policy post COVID-19 to reinvigorate Chinese economy, similar to the “infrastructure spree” post GFC. This new policy is worth our attention.

Czech Republic

Key local contact: Ivan Sagal
Actions proposed by industry leaders

None so far.

Actions confirmed by governments/States

Salary contribution

The Czech government approved on 23 March 2020 the salary contribution for employers who are affected by quarantine or other restrictions. Based on the system, the government will provide employers with employees' salary contribution in three different amounts:

  1. Contribution in the amount of 80% of the paid salary compensation if the employer is unable to assign work to employees due to quarantine or childcare affecting a significant proportion of employees (at least 30%);

  2. Contribution in the amount of 50% of the paid salary compensation in case of the restriction of the availability of inputs (i.e. raw materials, products, services) necessary for employer's activity as a result of quarantine measures at the supplier; and

  3. Contribution in the amount of 50% of the paid salary compensation in case of reduced demand for employer's services or products due to quarantine measures at the employer's sales point.
Electronic evidence of sales

The Czech government proposed the suspension of the obligation to electronically evidence sales for all obliged subjects for the duration of emergency and following three months. The proposal will be discussed tomorrow in the House of Commons.

COVID I Loan Program

The COVID I Loan Program provides support to small and medium-sized enterprises in the form of soft loans of CZK 500,000 to CZK 15 million with zero interest rates. Loans are granted up to 90% of eligible expenditure with a maturity of 2 years (with a possibility of deferred repayment for up to 12 months). The loan will be provided by the Czech-Moravian Guarantee and Development Bank up to the amount of CZK 5 billion. At this moment, it is not possible to request a loan under the COVID I Loan Program anymore.

Tax measures

The Minister of Finance introduced extraordinary tax measures to mitigate the impact of the pandemic on businesses and other taxable persons. Based on those measures, the deadline for filing tax returns or statements of income tax for the tax year of 2019 has been extended for all legal entities and natural persons by three months. All interests in arrears, postponed payment amount interests and fines for late filing will be exempted under the condition that tax returns or statements of income tax for the tax year of 2019 will be filed by 1 July 2020.

A fine for not filing a VAT control report is also exempted if a VAT payer files it additionally without a demand.

In addition, a fine for late filing of a real estate acquisition tax return or for late payment of a real estate acquisition tax or an advance payment of such tax, is exempted under the condition that it will filed or payed by 31 August 2020.
Market comments

Czech leading banks (e.g. the Czech Savings Bank, the Czechoslovak Commercial Bank, the Raiffeisenbank or the Commercial Bank) offered to their clients to request the deferral of mortgage loans or loans for up to three months.

The Czech Savings Bank also offered to entrepreneurs the possibility of fast drawing of bridging loans (in cooperation with the Czech-Moravian Guarantee and Development Bank).


Key local contact: Casper Moltke- Leth / Philip Graff
The Danish government and parliament have presented a comprehensive programme in order to help the Danish economy and businesses in the midst of the crisis. Some of the initiatives include:

Temporary salary compensation 

Tripartite agreement on temporary salary compensation for employees at risk of losing their jobs because of the crisis effective from 9 March 2020 to 9 June 2020.

The salary compensation scheme applies to all employees of all private enterprises if the enterprise has: 

  • Terminated 30% or more of the total workforce; or

  • Terminated more than 50 employees. 

During the time of termination in which the employees are sent home due to COVID-19, the enterprise will pay the employee's full salary and then receive the following compensation provided certain criteria are met:

  • Salaried employees: Compensation from the State is 75% of the employee’s salary, subject to a maximum of DKK 23,000 (EUR 3,060) per month.
  • Employees paid by the hour: Compensation from the State is 90% of the employee’s salary, subject to a maximum of DKK 26,000 (EUR 3,460) per month.

Temporary compensation for companies fixed costs

The Danish government and the parliament have agreed to cover some of the fixed costs, which the companies as a result of the COVID-19 crisis no longer have earnings to cover. 

The suggested programme is a compensation package, where companies can receive compensation for their documented fixed costs, such as rent, interest and contract-bound expenses (such as leasing), in a period where the companies are exposed to a large drop in revenue. 

The proposed compensation is based upon the following principles: 

1. Companies across all industries are able to get the compensation.

2. The compensation targets companies with a large drop in revenue (more than 40%). 

3. The compensation targets fixed costs and will constitute between 25% and 80%. 

4. The compensation will cover up to three months and be payable as soon as possible. 

5. If revenue drops significantly less than expected, the compensation will have to be repaid. 

The proposed compensation is based upon the following steps: 

80% if the drop in revenues has been 80-100%. 
50% if the drop in revenues has been 60-80%.
25% if the drop in revenues has been 40-60%.

Companies who have been prohibited from opening will in this period be compensated with 100% of their fixed costs. 

How will the compensation be received?

  • The company will send an audited statement of the expected drop in revenues from 9 March 2020 to 9 June 2020 as a result of COVID-19.

    • If the company receives the compensation it is possible to apply for support for the audited statement up to 80% of the cost.

The company will declare solemnly that the revenue has dropped. 

The Danish Business Authority will hereafter pay the compensation. 

There will be an ongoing random check and by the end of the period the actual revenue will be checked on the basis of VAT declarations. Hereafter there will be an adjustment according to the actual loss in revenues. 

It is not possible to seek the compensation if the fixed costs are less than DKK 25,000 (EUR 3,326) in the period. The maximum compensation the company can receive is DKK 60 million per company. 

Temporary compensation to self-employed and freelancers

Those that are self-employed, and freelancers, whose business will suffer a loss in revenue of a minimum of 30%, can be eligible to receive a compensation of 75% of the expected loss in revenue, subject to a maximum of DKK 23,000 (EUR 3,060) per month. 

Extended limit for the state-guaranteed loan scheme for both large, small and mid-cap companies  

For large companies (with more than 250 employees or a revenue of more than EUR 50 million) the guarantee-limit will be raised to a total of DKK 25 billion, and for small and mid-cap companies the guarantee-limit will be set to DKK 17.5 billion and a loss-limit of approx. DKK 5 billion, which will facilitate a total loan of up to DKK 25 billion. 

It is a condition to receive the state-guaranteed loan that the company is expected to suffer a loss in revenue of a minimum of 30%. 

For larger companies, the state-guaranteed loan scheme will cover 70% of the banks' financing of operations, where there are significant revenue losses of a minimum of 30% as a result of COVID-19.  

Emergency tax legislation - New temporary payment deadlines

Currently Danish companies have to pay withheld tax and labour market contributions in monthly installments. The Danish government has passed a bill under which companies are entitled to postpone payment of payroll tax and labour market contributions for 4 months and postpone VAT payment deadlines in order to give more liquidity to Danish companies. 

State funded compensation scheme of events of more than 1000 people affected by the assembly ban

Public events with an audience of more than 1000 people that have had to be cancelled between 6 March 2020 and 31 March 2020 due to the assembly ban can be eligible for compensation. 

The compensation scheme will cover expenses and loss of revenues from sources such as ticket revenues, revenues from sales of food, beverages and merchandise, sponsorship revenues and artist fees if such expenses and losses are not covered by the company's insurance. 

Moratoriums and changes to the Danish Bankruptcy Act

No current contemplated initiatives regarding changes to the Danish Bankruptcy Act or to insolvency proceedings.  


The Finnish government has introduced a working group including representatives of the Ministry of Economic Affairs and Employment, Ministry of Finance, Finnvera, Finnish Industry Investment and the major banks to monitor the effects of the COVD-19 on business activities, employment and security of supply, and to take necessary measures to alleviate negative impacts.

Additional financing to Finnish businesses

  • Additional domestic financing of EUR 10 billion available to businesses, primarily in the form of Finnvera guarantees.

  • Business Finland’s grant authorisations will be increased by EUR 150 million to permit immediate business support measures.

  • ELY Centres’ grant authorisations for business development projects will be increased by EUR 50 million.

  • The Bank of Finland has announced a corporate bond purchase programme in the amount of EUR 1 billion.
Alleviations on taxation and pension insurance payments

  • Upon request alleviations to filing dates of tax returns and the possibility to allow relief on penalty payments relating to taxes. 
  • Upon request extended payment time for car tax or excise duties.
  • Upon request extended time to pay pension insurances.

Proposed temporary amendments to employment legislation

  • A shortened negotiation period in a co-operation procedure regarding layoff in an employer regularly employing at least 20 employees and a shortened notification period when notifying an employee of the layoff.

  • Full-time employed entrepreneurs not being required to wind down their business activities, which otherwise would be case, in order to be eligible for the unemployment benefit.


Key local contacts: Romain de Ménonville / Nicolas Morelli

On 23 March, French Parliament has authorised the French government to take a wide range of emergency decisions to support the economy. Among the measures authorised and those already decided by public authorities are:

Moratorium on social contributions and direct taxes

  • Businesses may request a deferral of all or part of the payment of future tax and social security contributions to fall due. This deferral can be requested for three months without penalty.

  • Businesses may request a deferral of the payment of their next instalments of direct taxes (corporate tax; payroll tax) without penalty from their Public Finance Centre.

Measures to finance and preserve businesses cash flow

  • The French public investment bank Bpifrance has committed to help medium and small businesses through numerous schemes including the guarantee of up to 90pc of short and medium-term loans; three to five-year loans of up to 30 million euros including a 12-month interest only period.
  • Businesses subject to insolvency proceedings are not eligible to these schemes as well as more generally all distressed businesses within the meaning of EU law.

  • The Ministry of Finance has announced that all banks are already agreeing to extend the maturities owed by companies by six months, free of charge.

Reform of the temporary layoff/short-time work scheme:

A reform of the temporary layoff/short-time work scheme will be enacted in the coming days to facilitate applicable procedures and provide for the full reimbursement by the State to employers for the minimum compensation they have to pay to employees.

No opening of insolvency proceedings

The French government is authorized to take measures to adapt French insolvency law. The exact scope of these measures is still to be defined but could potentially include an extension of the deadline of the obligation to file for insolvency.


Key local contact: Benedikt Burger

Temporary suspension of obligation to file for insolvency and of creditor’s right to request opening of insolvency proceedings

On 25 March 2020 the German parliament passed a bill “to mitigate the consequences of the COVID-19 pandemic in civil, bankruptcy and criminal procedure law” (COVID-19 Bill) that aims at protecting companies that experience financial difficulties as a result of the COVID-19 pandemic.

The COVID-19 Bill includes a temporary suspension of both, the debtor’s statutory obligation to file for insolvency and the creditor’s right to request the opening of insolvency proceedings for insolvency reasons that occurred after 1 March 2020.

The COVID-19 Bill was confirmed by the Federal Council and becomes effective upon execution by the Federal President and promulgation in the Federal Law Gazette.

Background - statutory obligation to file for insolvency and creditors right to request opening of insolvency proceedings

Companies that become illiquid or overindebted are obliged to file a request for the opening of insolvency proceedings without undue delay, however, at the latest within three weeks after the commencement of insolvency or overindebtedness, Section 15a para 1 sentence 1 German Insolvency Statute (filing obligation).

The filing obligation is a personal duty of all legal representatives of the company, typically the manging director and/or members of the management board; in case the filing obligation is infringed, personal liabilities and criminal penalties are imminent.

Creditors of a company that experience payment defaults may request the opening of insolvency proceedings, provided they have a legal interest in the opening of the insolvency proceedings and show their claim and the opening reason to the satisfaction of the court, Section 14 German Insolvency Statute.

Suspension of debtor’s obligation and creditors’ right to file for insolvency

The COVID-19 Bill provides for a temporarily suspension of the filing obligation until 30 September 2020; this deadline can be shifted by the Ministry until 31 March 2021.

For the suspension of the filing obligation two conditions must be fulfilled:

  • The reason for insolvency must be based on the effects of the COVID-19 pandemic (and not on other reasons).

  • There are prospects for restructuring of the company due to pending procedures for granting public aid to the company and/or pending negotiations with (potential) creditors of the company about additional financing or reorganization of debt.

The COVID-19 Bill provides for a legal presumption that these conditions are fulfilled if the company was not illiquid as of 31 December 2019.

As a logic consequence, the liability for legal representatives of the company for payments despite company’s illiquidity or over-indebtedness (company law liability and criminal law liability) is lifted to this extent.

For the next three months, creditors’ right to request for opening of insolvency proceedings is cancelled for requests that are based on circumstances that occurred after 1 March 2020. Again, the Ministry can extend this cancellation period until 31 March 2021.

Extract from the text of the COVID-19 Bill:

§ 1
Aussetzung der Insolvenzantragspflicht

Die Pflicht zur Stellung eines Insolvenzantrags nach § 15a der Insolvenzordnung und nach § 42 Absatz 2 des Bürgerlichen Gesetzbuchs ist bis zum 30. September 2020 ausgesetzt. Dies gilt nicht, wenn die Insolvenzreife nicht auf den Folgen der Ausbreitung des SARS-CoV-2-Virus (COVID-19-Pandemie) beruht oder wenn keine Aussichten darauf bestehen, eine bestehende Zahlungsunfähigkeit zu beseitigen. War der Schuldner am 31. Dezember 2019 nicht zahlungsunfähig, wird vermutet, dass die Insolvenzreife auf den Auswirkungen der COVID-19-Pandemie beruht und Aussichten darauf bestehen, eine bestehende Zahlungsunfähigkeit zu beseitigen. Ist der Schuldner eine natürliche Person, so ist § 290 Absatz 1 Nummer 4 der Insolvenzordnung mit der Maßgabe anzuwenden, dass auf die Verzögerung der Eröffnung des Insolvenzverfahrens im Zeitraum zwischen dem 1. März 2020 und dem 30. September 2020 keine Versagung der Restschuldbefreiung gestützt wer-den kann. Die Sätze 2 und 3 gelten entsprechend.‘‘

§ 3

Eröffnungsgrund bei Gläubigeranträgen

Bei zwischen dem … und dem … [Datum drei Monate danach] gestellten Gläubigerinsolvenzanträgen setzt die Eröffnung des Insolvenzverfahrens voraus, dass der Eröffnungsgrund bereits am 1. März 2020 vorlag.

§ 4


Das Bundesministerium der Justiz und für Verbraucherschutz wird ermächtigt, durch Rechtsverordnung ohne Zustimmung des Bundesrates die Aussetzung der Insolvenzantragspflicht nach § 1 und die Regelung zum Eröffnungsgrund bei Gläubigerinsolvenzanträgen nach § 3 bis höchstens zum 31. März 2021 zu verlängern, wenn dies aufgrund fortbestehender Nachfrage nach verfügbaren öffentlichen Mitteln, andauernder Finanzierungsschwierigkeiten oder sonstiger Umstände geboten erscheint. 

Further information

The Ministry (Ms. Lambrecht) commented:

"We want to prevent companies from having to file for insolvency for the only reason that the aid provided by the federal government does not reach them in time. The regular three-week period of the Insolvency Statute is too short for these cases. [….] With this step, we are helping to cushion the consequences of the Corona outbreak for the real economy”.

If the conditions for the suspension of the filing obligation are fulfilled has to be judged by the management board of the company.

The causality of the COVID-19 pandemic for the financial crisis of the company can be verified by demonstrating that the company was liquid on 31 December 2019, for example through annual financial statements as of 31 December 2019 with unqualified audit opinion.

Obviously, the suspension of the filing obligation does not release the company from any of its (contractual) obligations towards business partners, employees etc.

The COVID-19 Bill addresses this issue for some types contracts (consumer agreements such as agreements for supply with utilities, loan agreements, insurance agreements and commercial lease agreements) and cancelled creditor’s termination right for payment default temporarily id certain conditions are fulfilled.

For the rest, the specific contract, any force majeure clauses therein and the statutory right to terminate for good reasons as well as the German rules for adjustment and revocation of contracts for interference with the basis of the transaction (Geschäftsgrundlage) are to be considered to understand the contractual obligations during the crises.


Key local contact: Konrad Siegler

1. As an important piece of legislation designed to address and mitigate the possibly grave economic consequences of the coronavirus, Governmental Decree No. 47/2020 (III.18.) has entered into force on 19 March 2020 (the “Decree”), which, among other measures, provides for the following:

a) Payment moratorium

Pursuant to the Decree, a payment moratorium has been introduced with respect to already existing credit facility agreements, loan agreements and finance lease agreements (the “Agreements”) that have been provided by lenders for business related purposes and have been utilized up until 18 March 2020. The payment moratorium applies to the (re)payment obligations arising out of the Agreements (such as the (re)payment obligation relating to the principal amount and all types of interests and fees) and to all types of debtors (irrespective of whether they are consumers or non-consumers). During the payment moratorium under the Decree debtors are not required to comply with their (re)payment obligations in accordance with the Agreements; however, the payment moratorium does not release and/or waive the relevant payment obligations. The payment moratorium shall be in effect until 31 December 2020, unless its term is extended by the Government of Hungary (the “Period of the Moratorium”). The Decree does not only contain the above rules for (re)payment obligations, but it also sets out that (a) contractual deadlines and the term of contractual undertakings and covenants that are stipulated in the Agreements and (b) the term of the security interests provided in relation to the Agreements shall be extended by the Period of the Moratorium. 

Pursuant to the Decree, debtors are not required to deliver any declaration/statement in order to be eligible for the payment moratorium. Provided that the Decree is applicable for a particular debtor and the given Agreement, the payment moratorium automatically takes effect. However, the Decree does not prohibit the contractual performance of the Agreements by the debtors on a voluntary basis and the debtors and the lenders are entitled to agree on the non-application of the payment moratorium in relation to a particular Agreement.

In a press release published on 23 March 2020, the National Bank of Hungary confirmed that it expects lenders to ensure that the periodical repayment instalments to be complied with by the debtors, following the expiry of the payment moratorium, will not be higher/more burdensome to the debtors (given that repayment instalments have not been paid under the payment moratorium) as compared to the original periodical repayment instalments (original, as if the payment moratorium would not have been introduced).

b) Termination of lease agreements

Pursuant to the Decree, lease agreements entered into in relation to commercial properties in the tourism, hospitality, entertainment, gambling, film, performance art, event organizing and sport related services sectors/industries (the “Lease Agreements”) cannot be unilaterally terminated until 30 June 2020 or until the state of emergency status currently in effect in Hungary is lifted (the “Lifting of the State of Emergency Status”). Also, the rent payable under the Lease Agreements cannot be increased during the state of emergency period even if the lessee would be entitled to do so otherwise pursuant to the terms of the Lease Agreements.

2. As a further development in terms of the extraordinary measures introduced in connection with the coronavirus, Governmental Decree No. 57/2020 (III.23.) has entered into force on 24 March 2020, containing certain rules in relation to judicial and tax enforcement procedures (the “Judicial and Tax Enforcement Decree”).

a) Judicial enforcement proceedings

Pursuant to the Judicial and Tax Enforcement Decree, among other provisions, (i) on-site enforcement procedures, on-site enforcement measures and ordinary auctions (ie. auctions presuming the personal presence of the relevant parties) cannot be carried out or take place; and (ii) arrangements/steps for the eviction of properties cannot be made/taken and the actual on-site eviction of properties cannot be carried out until the Lifting of the State of Emergency Status. As a further procedural relief, the procedural deadlines that apply to taking, among other items, the enforcement measures, steps or actions referred to above will be reinstated on the 15th calendar day following the Lifting of the State of Emergency Status. Furthermore, judicial enforcement administrators are not entitled to make the necessary arrangements for the auction sale of residential properties owned by natural persons as debtors (ie. publishing a notice on the auction sale of the residential property) until the 15th calendar day following the Lifting of the State of Emergency Status.  

b) Tax enforcement proceedings

Pursuant to the Judicial and Tax Enforcement Decree, tax enforcement proceedings (with a few exceptions) pending before the tax authorities as of 24 March 2020 are suspended until the 15th calendar day following the Lifting of the State of Emergency status.


Key local contact: Nipun Gupta

From 25th March 2020, with the exception of essential services and certain exempt industries, all of India is under a lock down for 21 days. This applies to all of India's 28 States and union territories. Passenger trains, interstate buses and suburban and metro trains have been stopped in India, State borders have been sealed. Indian visas have been suspended and flights to India have been stopped.

India is the world's second most populous country (1.3 billion) and the 5th biggest economy in the World (by nominal GDP of USD 2.94 trillion ).

The industries exempt from the lockdown include hospitals, healthcare, pharmaceutical and medical devices companies, petroleum, coal and power industry, information technology services required for essential services, staff engaged in the maintenance of key infrastructure like servers, e-commerce (for delivery of essential goods), private banking, insurance, capital and debt markets, internet and telecommunications.

Below is a summary of key steps taken:

1. Employment - the Government of India ("GOI") has issued an advisory that public and private enterprises should not terminate the services of their employees or reduce their pay or fire staff and should allow them to work from home. Numerous States have followed up with directives providing that all workers including contract and outsourced workers, temporary workers, and daily wage workers, who are forced to stay home/quarantined due to the lock down are presumed to be on duty. Employers have been directed to ensure that such workers are paid their entire wages and allowances. Some specialised employment law advice is being provided on the interpretation and application of these rules

2. The GOI has increased the threshold of default for filing an application to commence insolvency proceedings against a corporate debtor from Rs. 100,000 (USD 1,300) to Rs. 10,000,000 (USD 131,000). It has also been stated that if economic distress caused by COVID-19 continues beyond 30 April 2020, application of certain provisions of the Insolvency and Bankruptcy Code, 2016 may be suspended for 6 months to prevent companies from being forced into insolvency proceedings.

3.The Ministry of Corporate Affairs relaxed numerous requirements applicable to companies and LLP, such as :

Usually not more than 3 months must elapse between two board meetings and at least 4 board meetings must be held in a year. Now the gap between two consecutive board meetings for the next two quarters may extend to 180 days;

• all business at board meetings may be conducted by AV Board meetings;

• Companies and limited liability partnerships are being given an opportunity to regularize existing defaults in filing of forms, statements, documents, undertakings, returns etc, during the moratorium period from 1 April 2020 till 30 September 2020, without payment of additional fee and without risk of prosecution. Further, inactive companies have the opportunity to have themselves declared as a ‘dormant company’ to minimize compliance requirements

• A moratorium has been issued from 1 April 2020 to 30 September 2020 - no additional fees will be levied on any filing made with the MCA during this time;

• Every company is to have at least one director who is resident in India for more than 182 days in a financial year. Given the travel bans any period less than 182 will not translate into non-compliance for financial year 2019/2020

4. Listed entities – the Securities Exchange Board of India (“SEBI”) has given :

• 45 day extension to listed entities for filing quarterly financial results;

• 1 month extension for filing of annual financial results;

• Under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Listed entities have been exempted from the requirement that not more than 120 days should elapse between any two board meetings and audit committee meetings for meetings proposed to be held between 1 December 2019 to 30 June 2020;

• The deadline to file income tax and GST returns has been extended by 3 months

5. Moratorium on repayment of term loans – the Reserve Bank of India has given the option to lenders to grant borrowers a 3 month moratorium :

• from payment of installments including the principal and interest on term loans;

• interest on working capital loans; and/ or

• Further, for working capital loans sanctioned as cash credit or overdraft facilities to borrowers facing stress due to the pandemic, the lender can recalculate the drawing power by reducing margins and/ or reassessing the working capital cycle. This relief is available for changes effected up to 31 May 2020.

• None of the above changes will result in an asset classification downgrade and rescheduling of payments would not be considered a default on the part of the borrower.

6. Liquidity release. The Reserve Bank of India has taken several measures to increase liquidity for Financial institutions in India, expanding liquidity in the financial system sizeably to ensure that financial markets and institutions are able to function normally. It has reduced the cash reserve ratio of all banks by 100 basis points to 3.0 per cent of net demand and time liabilities;

7. Limitation Period – the Supreme Court of India has extended the limitation period for the initiation of a legal action and for filing any pleadings in any Court or Tribunal across India until further notice;

The Government of India at a federal level has announced the formation of a COVID-19 economic taskforce.


Key local contact: Alberto Salvade

The Government enacted extraordinary rules regarding, among others, deadlines for the fulfilment of formalities, including payment of taxes, financial measures to support enterprises, measures impacting on banks' loan and procedural aspects. Such measures have been included in the Law Decree issued on 17 March 2020 and the main contents of the same are summarised below (please consider that a Law Decree - notwithstanding its immediate effectiveness - has to be converted in to law by the Parliament within 60 days from its publication, therefore possible amendments are possible during the procedure):

Moratorium and other measures for bank loans for small-medium companies

Micro, small and medium-sized companies can benefit – under certain conditions - from the following financial support measures in relation to debt exposures towards banks and financial intermediaries: 

  • The credit lines granted and the loans granted for credit advances cannot be cancelled until 30 September 2020;

  • Non-installment loans with contractual expiration before 30 September 2020 must be extended until 30 September 2020 under the same conditions;

  • For mortgages and other loans with repayment in installments, the payment of installments or leasing installments due before 30 September 2020 is suspended until 30 September 2020, and the repayment plan of the installments is deferred in a manner that ensures the absence of new or greater charges for both parties.

Support to the companies' liquidity through guarantee mechanisms

  • To support the liquidity of enterprises affected by the epidemiological emergency, forms of public guarantee are provided in order to facilitate the grant of loans to companies that have suffered a reduction in turnover.

Tax measures

A package of fiscal and tax measures are provided in the mentioned decree, in particular:

  • Specific provisions in order to permit the conversion into tax credits of the deferred tax assets in relation to the assignment/sale of receivables towards defaulting debtors occurred within 31 December 2020;

  • For specific categories of taxpayers - carrying out the activities mainly affected by the emergency (expressly provided by the Decree) – withholding payments, social security and welfare contributions and premiums for compulsory insurance are suspended for the period between 2 March and 30 April 2020. Enterprises which can benefit from the suspension are those in the entertainment, sports and restaurant industry. The payments will be due - without the application of penalties and interest - by 31 May 2020 or split into five equal monthly payments starting from the same date. The above mentioned taxpayers are also given the suspension of VAT payments that should have been due in March.

  • With the exception of the payments of each type of tax and the withholding taxes also related to the regional and municipal surcharges which are due, for all taxpayers the tax fulfilments (e.g. tax returns, communications, etc.) expiring in the period between 8 March 2020 and 31 May 2020 are postponed. The suspended fulfilments shall be carried out by 30 June 2020 without the application of any penalty.

  • Suspensions of payments are provided for taxpayers carrying out a business, art or professional activity, which achieved a total amount of revenue or a turnover not exceeding 2 million Euro in the previous fiscal year,

  • Statute of limitation is postponed for two calendar years (i.e. fiscal year ending on 31 December 2015 can be assessed until the end of the calendar year 2022),

  • Tax credit for retailers: in favor of taxpayers carrying out business activities – with the exception of the activities of trade in food and basic necessities as listed by the Decree of 11 March 2020 – a tax credit equal to 60% of the amount of real estate rental expenses incurred in March 2020 is established (for the properties included in the cadastral category C/1).

  • In the period between 8 March and 31 May 2020, most of the terms and deadlines given to tax offices and, in general, tax authorities to execute their duties, are suspended;

  • Other provisions have been made in relation to:

(i) tax disputes' suspension/postponement,

(ii) deadline for tax office postponement and 

(iii) postponement of sums due in the period between 8 March and 31 May in relation to

a. collection notices,

b. tax assessments already final, 

c. assessment notices issued by the Customs Agency and other local authorities and 

d. INPS assessment notices.

Employment measures

  • Individual and collective dismissals: companies can't dismiss employees for redundancy until 17 May 2020. Any collective redundancy procedures already opened must be put on hold;
  • Special leaves: starting from 5 March 2020, the following leaves are introduced:

(i) 15 days of paid leave (50% of the salary): for parent employees with children up to 12 years old OR a bonus of Euro 600 for paying baby-sitting services.

(ii) Unpaid leaves: for parent employees with children from 12 to 16 years old;

(iii) 12 days of paid leave for March and April 2020: for employees who must assist disabled family members (i.e. permits according to Law 104).

  • Financial support to companies for purchasing protective devices and equipment for employees and a tax credit for costs borne for sanitization of the work environment.
  • Bonus of Euro 100 for employees who have been working at company's premises during lockdown: employees having a total annual income up to Euro 40K gross are entitled to Euro 100 for the month of March. This bonus is paid by the employer within the April pay slip and set off with social security contributions due to the National Social Security Agency "INPS".
  • Wage Supplementary Funds: companies (with a minimum of 5 employees) can apply for Wage Supplementary Funds whereof employees can be totally or partially suspended from work by receiving an allowance from INPS for a maximum period of 9 weeks.

Corporate law measures

  • Extension up to 180 days (from the end of the financial year) of the term for balance sheet's approval (against standard 120 days);
  • A package of provision in order to allow the call and the conduct of shareholders' meeting remotely by telematics.


Key local contact: Slawomir Szepietowski

The Polish government is to launch a PLN 212 bn (EUR 47 bn (almost 10% of the Polish GDP) package of measures protecting businesses and employees against the adverse effects of the spread of the COVID-19 pandemic. 

The package – as for now still being a draft Bill – consists of 5 main pillars including different areas of the economy. The number of particular measures equals to 60 and is still under discussion and development. 

Pillar I – "Entrepreneurs"

This will focus directly on supporting the enterprise sector through such activities as:

  1. Exemption of all self-employed people and micro-companies from ZUS (social security) contributions for three months provided that their revenues have dropped by more than 50 percent compared to February 2020;

  2. Deferral of the payment of social security contributions or distribution in instalments without additional charges;

  3. Loan guarantees, liquidity support and micro-loans up to PLN 5,000 (EUR 1100);

  4. No penalties for delays in public tenders;

  5. Extension of bank working capital loans;

  6. Settlement of this year's loss next year.

Pillar II – "Employees"

The package is supposed to consist, among others things, of:

  1. Co-financing of 40% of employees' salaries at companies that have seen their turnover drop as a result of the pandemic;

  2. People employed on commission and specific-task contracts as well as self-employed people would be able to get up to 80 percent of Poland's minimum wage; the current minimum wage level is PLN 2,600 (EUR 577) before tax and social insurance contribution. 

  3. "credit vacation";

  4. "vacation from administrative duties";

Pillar III – “Healthcare”

Approximately PLN 7.5 bn (EUR 1.7) will be allocated, in particular for the infrastructure of infectious diseases hospitals and medical equipment.

Pillar IV – "Polish financial system" 

The government will allocate more than PLN 70 billion (EUR 15.5 bn) for this purpose. This part is to include:

  1. Liquid funds;

  2. The Polish Financial Supervision Authority (KNF) and Ministry of Finance regulatory package;

  3. National Bank of Poland (NBP) liquidity package.

Pillar V – "Investments" 

The government will set up an investment fund worth at least PLN 30bn (EUR 6.66 bn), independent from EU funds. The money will be used for public investments, including local roads, digitization, modernization of schools and energy transition. 


Key local contacts: Marcus Chow / Ken Cheung

In its recent 2020 Budget, Singapore will spend S$4 billion on a slew of new measures and enhancements to existing schemes to stabilise its economy amid the uncertainties caused by COVID-19.

The special Stabilisation and Support Package will help workers to remain employed and aid companies with cash flow in two ways:

  • The first is through a Jobs Support Scheme worth S$1.3 billion. This aims to help firms retain local workers – more than 1.9 million Singapore citizens and permanent residents (PRs) – during this period of uncertainty.
  • Employers will receive an 8% cash grant on the gross monthly wages of each local employee on their Central Provident Fund (CPF) payroll for the months of October to December. This is subject to a monthly wage cap of S$3,600 per worker. 
  • The second is an enhancement of the Wage Credit Scheme, which supports enterprises embarking on transformation efforts and encourages them to share productivity gains with workers in the form of wage increases.
  • The scheme currently co-funds wage increases for Singaporean employees earning a gross monthly wage of up to S$4,000. This will be raised to S$5,000 for qualifying wage increases given in 2019 and 2020 to benefit more Singaporean workers.
  • The Government co-funding levels will also be increased by 5% points to 20% and 15% for 2019 and 2020, respectively.

There will be a corporate income tax rebate for the year of assessment 2020 at a rate of 25% of tax payable and capped at S$15,000 per company. This move, which will benefit all tax-paying firms, will cost the Government about S$400 million.

To help enterprises access working capital more easily, the Enterprise Financing Scheme’s Working Capital Loan component will also be given a boost.  For a year, the maximum loan quantum will be doubled from S$300,000 to S$600,000, while the Government’s risk-share will also be increased to 80%, from the current 50% to 70%.

The Government will also support tenants and lessees of Government-managed properties with more flexible rental payments, such as instalment plans. 

Within the tourism sector, a property tax rebate of 30% for the year 2020 will be granted to the accommodation and function room components of licensed hotels and serviced apartments, and Meeting, Incentive, Convention and Exhibition (MICE) venues.

International cruise and regional ferry terminals will receive a 15% property tax rebate, while the integrated resorts will receive a 10% rebate.

Firms in the tourism sector can also look forward to a temporary bridging loan programme for additional cash flow support.

Under this programme, eligible enterprises can borrow up to S$1 million with the interest rate capped at 5% p.a. from participating financial institutions. The Government will provide 80% risk-share of these loans. The programme will start in March and will be available for a year.

For the aviation sector, the Government will grant a 15% property tax rebate for Changi Airport, alongside a suite of measures including rebates on aircraft landing and parking charges, assistance to ground handling agents and rental rebates for shops and cargo agents at Changi Airport.

To support firms in the food services and retail business, the National Environment Agency (NEA) will provide a full month's rental waiver to stallholders in NEA-managed hawker centres and markets.

Other government agencies, like the HDB, will provide half a month of rental waiver to its commercial tenants. A 15% property tax rebate will also be granted to qualifying commercial properties. 

For the transport sector, the Government will contribute S$45 million towards a Point-to Point Support Package, with the remaining provided by taxi and private-hire car operators.


Key local contact: Alfonso Carrillo

Spain declared state of alarm last Saturday the 14th of March, which was supposed to last 15 days but it is going be extended 15 days more.

As a consequence of that, the Spanish Government has announced extraordinary measures and ruled some Royal Decrees, the most relevant are Royal Decree 463/2020 and Royal Decree Law 8/2020.

Some of these measures are:

  • Measures to strengthen the health system
  • Support measures for families and vulnerable groups
  • Measures to the business sector to guarantee solvency and stability of companies
  • Measures to make the economy more flexible, preserve employment and support workers

In this regard, the most relevant economic measures adopted by the Government are: 

  • Facilities and flexibility to request the deferment in the payment of taxes
  • 400 million Euro finance line given by Instituto de Crédito Oficial (ICO) to help companies´ solvency and self-employees 
  • 100 billion Euro guarantee plan by ICO to help companies and self-employees to obtain loans and finance
  • Regarding mortgage loans, one month grace period for vulnerable groups and families
  • The Government is empowered to supervise and control the relevant acquisition of companies belonging to strategic sectors

Regarding legal measures that affect judicial proceedings and insolvency proceedings, the most relevant measures are:

  • The suspension of procedural judicial and administrative terms
  • The suspension of any limitation period before filing a claim
  • The suspension of judicial proceedings which are not considered urgent

The Consejo General del Poder Judicial, the Spanish Board of Judges, has suspended the submission of any writ which is not considered urgent. 

Courts are closed except for urgent cases such as criminal cases with arrested people, under age cases, interim reliefs regarding disable people, etc. 

In the agreements adopted by the Board of Judges there is no provision regarding civil and commercial proceedings. Thus, civil and commercial cases are not considered as urgent.

These suspension periods will last until the state of alarm is over. 

Regarding insolvency and bankruptcy proceedings, the most relevant measure is a two month grace period for the debtor to submit the insolvency petition to the court since the moment in which the state of alarm finishes. There will be no reason for liability when the debtor had the obligation to apply for the insolvency statement but he did not.

In addition, debtors´ voluntary insolvency application will have preferential processing over creditors´ insolvency request that will be stopped until two months after the state of alarm is over.


Slovak Republic

Key local contact: Ivan Sagal

Actions proposed by industry leaders

In coordination with the government, the Slovak critical infrastructure companies are preparing for the crisis situation, e.g. in thees energy sector they are allocating reserve workers, preparing backup workplaces, implementing strict regimes for employees, e.g. health screening of employees at the entrance to premises.

Actions proposed by governments/States

Due to the ongoing situation, the authorities require that businesses and institutions move to online/home-office regimes, or temporarily close (except in critical sectors, e.g. food, energy, pharmaceutical).

The Slovak government has proposed, in coordination with large businesses and economic associations, several measures mitigating the negative impact of the current situation: 

  • The financial injections will be prepared for chosen sectors; 
  • Electricity prices may be reduced to some businesses; 
  • The deadline for filling tax statements should be postponed for 3 months.

Actions proposed by other subjects

Banks are preparing regimes to postpone the debt payments for a wide variety of subjects and offer short-term loans. 


Key local contact: Mattias Lindberg

  • The Swedish Government has proposed that airlines will be able to receive credit guarantees in 2020 amounting to a maximum of approximately Euro 0.5 billion, of which Euro 0.15 billion is intended for SAS. The Swedish State must be able to guarantee loans secured from commercial banks during the period that airlines are affected by the spread of COVID-19. SAS plays an important role in meeting society’s basic need for aviation infrastructure in both Sweden and Denmark. The Swedish and Danish governments have therefore agreed that the Danish Government will present a similar measure for SAS. It will also be proposed that the Swedish Export Credit Agency’s credit guarantee framework be expanded to support Swedish export companies and, by extension, the shipping industry.
  • The Swedish Government has proposed actions that are aimed to promote other Swedish businesses. Some of the measures adopted to support companies affected financially is the proposal on short-time work, which is intended to avoid layoffs and give companies the opportunity to quickly get started again once the situation has changed. It is also proposed that companies be given the opportunity to defer payment of employers’ social security contributions and employees’ preliminary tax for up to one year. The aim is for the deferment to apply for employers’ social security contributions and preliminary taxes for no more than two months.
  • The Swedish Government has also proposed a bill announcing public subsidies for employers’ salary costs. One of the conditions is that the company (the employer) is under temporary and serious financial distress which has been caused by an unforeseeable outside event. If that, and other conditions are at hand, then the Swedish State will assume costs of ¾ of an employee’s salary in connection with the temporary reduction of working hours. 
  • There is of course great uncertainty concerning the present situation, and the situation could change rapidly. Hence, in addition to what has already been presented, a large number of other measures are also being considered that can quickly be taken if the need arises. However, as of now there has not been any discussion to the effect that bankruptcy or insolvency legislation shall be changed as such. 

The Netherlands

Key local contacts: Olaf Trojan / Rene Rieter

Government measures (emergency aid)

  • The Dutch Government has announced a package of temporary emergency measures to help businesses in the Netherlands. The main purpose of the measures is to provide companies with short-term liquidity.

  • The SME Credit Guarantee Scheme helps small and medium sized enterprises (SME) by enlarging their collateral through government secured loans. It gives 90% government suretyship for 50% of the facility (extended to 75% as part of COVID-19 measures), for loans of up to €1.5 million.

  • Business loan guarantee scheme (Garantiefonds Ondernemingsfinanciering, GO) – for large and medium-sized companies in the Netherlands. It is a business loan guarantee scheme; capital providers receive a 50% guarantee from the government for a loan or bank guarantee made available to medium and large enterprises.  It applies to loans from EUR 1.5 million to EUR 50 million (extended as part of COVID-19 measures).

  • The Dutch Tax and Customs Administration will grant postponement of payment of various taxes without having to give reasons and without penalty/interest (for the time being 3 months), and the Ministry of Economic Affairs and Climate is extending 'the guarantee for small and medium-sized enterprises'. This makes it easier for entrepreneurs to obtain loans in order to continue to meet their obligations. 

No measures restricting the enforceability of claims

  • There are no measures (yet) that prevent or temporarily block the performance of commercial agreements.

Provisions from the corporate sector

  • The most important Dutch banks (ABN AMRO, ING, Rabobank, Volksbank - including SNS and ASN - Triodos and BNG Bank) have jointly announced that there are possibilities to temporarily suspend payment obligations (for six months) for small and medium sized enterprises. The suspension applies for loans up to an amount of EUR 2.5 million, both for repayment and interest payments. This applies to healthy companies only.
  • The ACM (Dutch Competition Authority) has allowed the banks to make such arrangements, which would under normal circumstances entail a breach of competition rules.
  • There are no collective measures for the suspension of, for example, rent payments or the costs of utilities. 

Very limited availability of courts

  • The Dutch judiciary has decided to close all the courts as of Tuesday 17 March 2020 until further notice. However, new cases can still be filed and submitted as usual. Bailiffs will also continue to serve documents. In principle, no oral hearings will take place until at least 6 April 2020. Judgments can still be delivered and sent. 


Key local contact: Lucas Pitts

The insolvency regime in the UAE, in keeping with many GCC countries, is relatively new. The UAE introduced its Bankruptcy Law in 2016, followed by the Kingdom of Saudi Arabia in 2018 and Bahrain in 2019. The legislation in these three countries now provides for companies to obtain protection from insolvency in order to restructure debt and undertake steps to become solvent. 

Within the UAE, two free zones also have their own insolvency regime. In the Dubai International Financial Centre, the Insolvency Law 2019 applies and in the Abu Dhabi Global Markets, the Insolvency Regulations 2015 apply. Again, in keeping with the Federal Law, these provide for companies facing bankruptcy to seek protection from creditors in order to restructure and return to solvency. 

UAE Government action in response to COVID-19

  • On 22 March, the UAE government approved an additional AED 16 billion stimulus package to address the effects of COVID-19. This brings the total package to AED126 billion.
  • The initial stimulus package announced by the Central Bank on 14 March was in the amount of AED 100 billion. The package allowed banks to free up their regulatory capital buffers to boost lending capacity.
  • Banks in Dubai are now offering customers and their SME clients loan repayment holidays of 3 months with zero interest and no fees together with reduced charges more generally. This follows the actions of UAE's biggest lender, First Abu Dhabi Bank in deferring instalments for all loans from SME clients.
  • Banks have also announced a willingness to assist clients with debt consolidation solutions and to work with customers facing margin calls on share portfolios.

Other specific policies include in Dubai:

  • Cancellation of the 25% down payment required for requesting instalment based payment of government fees for obtaining and renewing licenses.

In Abu Dhabi:

  • Allocation of AED 3 billion to an SME credit guarantee scheme.
  • Allocation of AED 1 billion to establish a market maker fund to enhance liquidity and sustain balance between supply and demand.
  • A reduction on industrial land leasing fees of 25% on new leases.
  • Suspension of bid bonds and exemption of start-ups form performance guarantees for projects up to AED 50 million.
  • Exemption to all commercial vehicles from annual registration fees.


Key local contact: Joss Hargrave

The UK Government has announced wide-sweeping measures including an assistive financial package of at least £330 billion to help businesses cope. Amongst the measures designed to assist businesses are: 

For smaller businesses

  • Up to £5 million in value;

  • Interest-free for the first twelve months; and

  • Guaranteed by the UK Government for up to 80% of the loan value. 
  • Businesses with fewer than 250 employees will be eligible for a refund of up to two weeks' statutory sick pay per employee who was eligible for SSP due to COVID-19.
  • Certain businesses will be eligible for a Business Rates holiday.

For larger businesses

  • The government has announced a new COVID-19 Corporate Financing Facility meaning that the Bank of England will buy short term debt from companies as a way to support companies affected by short-term funding issues. 

For businesses generally

  • A coronavirus job retention scheme will be introduced designed to prevent employers making its employees redundant who are unable to work due to coronavirus. It offers all employers access to a grant covering up to 80% of the wages of such employees. The grants will be:
  • Capped at £2,500 per month;
  • Available initially for three months; and
  • Backdated to 1 March 2020 and available from next month. 
  • Income tax payments on accounts due under Self-Assessment on 31 July 2020 will be deferred until 31 January 2021.


  • There is much speculation as to whether a temporary moratorium against creditor action will be enacted by the UK Government but this has not materialised as yet other than with regard to commercial tenants who will be protected from forfeiture if they cannot pay rent due to Covid-19. This is obviously very welcome news given that the rent quarter day is today, 25 March.

  • This will apply to commercial tenants who miss rent payments in the next three months.  However, tenants will still be liable for the rent after this period.

  • Bird & Bird has already acted for a number of Banks that are voluntarily granting capital repayment holidays and waivers around covenant testing. More clarity would obviously be provided by clear legislation relating to a more general moratorium, not just for tenants.

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Book Launch: "Autonomous Vehicles and Civil Liability in a Global Perspective"

May 24 2024

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