Panacea in a pandemic crisis?

Previously, I wrote a blog about what to do when coronacoulance turns into corona conflict.
The legislature now wants to allow a request for a stay of bankruptcy filing if the business owner in question cannot pay due to corona.

Deferring a bankruptcy petition

The court will grant these deferral requests only if the following conditions are met:

• the business owner is temporarily unable to meet its payment obligations due to a lack of cash;
• this liquidity distress has arisen primarily or exclusively because the business owner has not been able to (fully) continue its business operations due to the restrictive measures declared by the government in connection with the corona virus since last March 16;
• prior to the promulgation of the restrictive measures, there were no financial problems;
• the business owner 's business has earning capacity and future prospects, and
• the creditor who filed the bankruptcy petition is not materially and unreasonably prejudiced by the stay. (source: https://bit.ly/2NS9oFl)

Directors' liability

In my view, this is a risky arrangement to use. If it is used against one's better judgment, making the creditors' situation worse, directors' liability lurks.

Moreover, directors' liability also lurks when new obligations are assumed that the director knew or should have known that the company could not meet those obligations and also compensate for the resulting damages. This is the time-honored Beklamel standard.

If you want to file for bankruptcy of one of your debtors, or your company's bankruptcy is filed, contact us for practical and sound advice.