Vol 17 (2020) - Issue 6

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Corporate Restructuring in Times of COVID-19: A New Insolvency Law Assessment to Facilitate Corporate Rescue

Synopsis
We are witnessing the full effects of the pandemic which has triggered a crisis that is having a major impact on economic activity around the globe and is still unfolding, producing devastating consequences in the economy and its players. As result of this crisis, many businesses will need to restructure, both operationally and financially.
Therefore, this paper highlights the importance of corporate reorganisation proceedings. As opposed to in-court insolvency proceedings and claims that outof-court proceedings and hybrid procedures can effectively represent a cost-efficient solution to distressed business entities. Furthermore, it presents the insolvency law assessment being conducted by the European Bank for Reconstruction and Development (EBRD) on corporate restructuring processes in an attempt to assess the extensiveness and effectiveness of insolvency laws in its 38 economies of operation. The task of the EBRD is very relevant and will raise awareness in the shortcomings of insolvency frameworks in order to provide advice in respect to the most efficient system of corporate restructuring and identify possible areas for reform.
A modern reorganisation law should facilitate the access to business restructuring and provide for a plan to bind dissentient creditors and impose a minimum stay on execution over assets by creditors to facilitate a restructuring. At the same time it should preserve the rights of creditors and the value of the assets that they could ultimately use for recovery. The insolvency law assessment being conducted by the EBRD constitutes a working tool in this sense, and it is certainly representing an instrumental process towards facilitating corporate rescues.