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European Union

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As the 2019 Novel Coronavirus (COVID-19) continues to spread across the world, and governments and health authorities work tirelessly to defeat it, major economies are experiencing mounting pressure as consumer spending, production and investment are drastically curtailed due to virus-related risks.We recognize that many of our clients are also facing significant and urgent business impact and legal challenges.Our Baker McKenzie teams across the world are working with clients, regulators and various authorities to produce a…

On the 22nd of November, the European Union announced a proposed directive for a framework of reforms to its member states’ restructuring and insolvency laws.  The EU proposal reflects a philosophy and approach that U.S. investors will find familiar:  a regime that allows distressed companies to restructure often yields greater recoveries for creditors than a regime that relies exclusively upon liquidation.  Indeed, the proposal points to a World Bank study, which shows that countries that have restructuring regimes yield average recoveries to creditors of 83%, compared with countries that exclusively have liquidation procedures and which yield average recoveries of 57%.  Given the proposal’s expressed goal of promoting restructuring, it is not surprising that the proposed directive also borrows many of its features from chapter 11 of the U.S. Bankruptcy Code.