In this session, the panellists took up the challenge of predicting the post COVID future for directors, and the immediate challenges they will face as a result of the winding back of protections and support provided in 2020.

The panellists discussed the range of direct financial support, and temporary tweaks to insolvency regimes, introduced in their respective countries in response to the economic problems raised by the COVID-19 pandemic. In some jurisdictions, directors were given temporary relief from insolvent or wrongful trading duties. The timeframes over which that relief has, or is to, expire varies widely. With ongoing issues raised by further waves of infection and new strains of COVID-19, it may be difficult to predict with certainty when the various relief will end, and, where it has ended, whether or not it may need to be reintroduced.

Baker McKenzie has a comprehensive Guide to Government Intervention Schemes which outlines response strategies across the panellists’ jurisdictions, and a wide range of other countries.

Looking forward:

  • in the United Kingdom, the inability to enforce debt owed over leased land and other property leases has led to significant accumulated debt, waiting to be enforced once restrictions on doing so are lifted. There are a range of restructuring options (including the new restructuring plan procedure ) available to directors. Directors would be wise to consider those options (a comment echoed by all the panelists), but also need to be aware regulators will be scrutinising the use of insolvency procedures to release COVID era debt to ensure they do so for bona fide purposes;
  • in Austria, as in other jurisdictions, tax and government authorities scaled back applications for insolvency proceedings, with there being a sharp decline in overall insolvency proceedings last year. An increase in enforcement activities can expect to see an increase in insolvency appointments;
  • in the United States, the scale of government stimulus has dramatically changed the economic fortunes of many businesses from where they were at the start of the pandemic. Where relief in the form of deferral of repayments under loans was put in place last year, those obligations are starting to fall due this year.  That is likely to start to result in financial stress in the second half of this year;
  • in Singapore, as in other parts of Asia, many businesses are family owned, and may not readily face up to their financial difficulties. Echoing comments in all jurisdictions, now is the time to assess whether your business has any financial difficulties. Creditors are more understanding than ever as a result of the pandemic, creating an opportunity to try to resolve those issues before they develop into greater and less fixable problems.

Panellists for this session were Patrick Ang, Don Bernstein, Susanne Fruhstorfer, Mohsin Meghji and Mark Phillips QC.


Partner, Brisbane
Email: Ian Innes