While those in the restructuring and insolvency profession have been attempting to predict what the temporary suspension of the wrongful trading provisions proposed by the government might look like, the Corporate Insolvency & Governance Bill (the “Bill”) is not quite as anticipated.

Wrongful trading is a claim which can be brought (with personal liability) against a director, when a company has entered insolvent liquidation or administration and the director knew or ought to have concluded that there was no reasonable prospect that the company would avoid such proceedings, but nevertheless continued to trade the business. The defence to the claim is that the director took every step to minimise potential loss to creditors. This has understandably concerned many boards of directors during the COVID-19 pandemic and the consequent uncertainty and, therefore, any relaxation to enable confidence to trade is likely to be welcome.

Continue Reading Wrongful Trading – Temporary COVID-19 Changes Introduced by the Corporate Insolvency & Governance Bill

A winding-up petition is one of the most critical pieces in a creditor’s armoury where a debt remains unpaid. However, in these challenging times, the government clearly wants to provide a temporary shield to companies who are unable to pay their debts due to COVID-19.

Although the announcement by the UK Government on 23 April 2020 referred to the restrictions on issuing winding-up petitions as being part of further measures to “protect the UK high street from aggressive rent collection and closure“, the Corporate Insolvency and Governance Bill 2020 (the “Bill”) is not sector specific – the changes apply to any company that can be wound up and to any type of debt, not just rent liabilities.

Continue Reading Winding-Up Petitions – COVID-19 Temporary Restrictions Introduced by the Corporate Insolvency and Governance Bill 2020

The impact of COVID-19 pandemic has resulted in financial institutions and regulators across the globe operating in an entirely new environment. The Financial Action Task Force (“FATF”) has identified the potential risk of criminals exploiting the unprecedented situation through cybercrime, fundraising for fake charities and medical scams, and emphasized the importance of financial institutions’ robust Anti-Money Laundering (AML) and Counter-Terrorist Financing (CTF) compliance and controls.

Continue reading this Legal Update on MayerBrown.com.

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During the economic downturn associated with the COVID-19 pandemic, some 401(k) plan sponsors may be considering a mid-year reduction or suspension of matching contributions or nonelective contributions to their 401(k) plans as a cost-saving measure. Generally, whether the matching or nonelective contributions may be reduced or suspended will depend on the specific terms of the plan. In addition, in the case of  a plan that is intended to be a safe harbor plan under sections 401(k) or 401(m) of the Internal Revenue Code of 1986 as amended (the “Code”), the Code imposes particularly restrictive rules limiting mid-year changes. The following summarizes steps that a plan sponsor must take to reduce or suspend matching or nonelective contributions to its safe harbor plan during the plan year without jeopardizing the plan’s tax-qualified status.

In order for a plan to be a basic safe harbor plan under sections 401(k)(12) or 401(m)(11) of the Code or a qualified automatic contribution safe harbor plan under sections 401(k)(13) or 401(m)(12) of the Code, an employer must make a specified level of matching contributions, or alternatively, a specified level of nonelective contributions, to the plan. In addition, an employer must provide in advance of the plan year a “safe harbor notice” of the matching contributions or nonelective contributions, as applicable (but see SECURE Act change below), and the plan must satisfy certain vesting requirements. If these requirements are satisfied, the plan will be treated as satisfying the actual deferral percentage (ADP) and, with respect to matching contributions, the actual contribution percentage (ACP) nondiscrimination tests that normally apply to 401(k) plans. (We refer hereinafter to a 401(k) plan that is intended to satisfy the safe harbor rules as a “safe harbor plan,” and the matching contributions or nonelective contributions used to meet the safe harbor requirements as “safe harbor contributions.”)

Continue Reading How to Reduce or Suspend Matching or Nonelective Contributions Under a Safe Harbor 401(K) Plan

On May 21, 2020, the Japanese government announced that it is lifting the state of emergency in Osaka, Kyoto and Hyogo.  The largely voluntary measures under the state of emergency will remain in place with respect to Tokyo and its surrounding prefectures (Saitama, Chiba, Kanagawa), as well as Hokkaido.   The state of emergency with respect to these five prefectures is slated to run through May 31.  Based on a comprehensive review of the spread of infections, the medical supply system and the monitoring system for infections (including the number of PCR tests available), the declaration of emergency in the remaining five prefectures may be lifted at the end of the month.

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If you wish to receive periodic updates on this or other topics related to the pandemic, you can be added to our COVID-19 “Special Interest” mailing list by subscribing here. For any other legal questions related to this pandemic, please contact the Firm’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.

 

On May 20, 2020, the UK Government published its much anticipated draft legislation (the Corporate Governance and Insolvency Bill) which aims to provide greater opportunities for company survival and better returns for creditors during and after the COVID-19 emergency. The Government intends to ask Parliament to expedite progress of the Bill.

If enacted in its current form, the Bill will introduce greater flexibility into the UK’s insolvency regime, allowing companies breathing space to explore options for rescue while supplies are protected, so that they have the maximum chance of survival. It will also temporarily suspend parts of insolvency law to support directors to continue trading through the COVID-19 pandemic without the threat of personal liability, and to protect companies from aggressive creditor action.

Continue Reading UK Government Publishes UK Restructuring and Insolvency Law Reforms

In this webinar, Vera de Gyarfas discussed the state of the oil and gas sector in Latin America in light of the oil price crash and the COVID-19 lockdowns and provided her analysis of the sector outlook, particularly for Argentina, Brazil, Colombia, Ecuador, Mexico and Peru.

A partner in Mayer Brown’s Global Oil and Gas group, Vera is a leading energy lawyer with deep experience in LNG and E&P. She has worked on some of the highest-profile projects and M&A transactions across Latin America as well as in other regions.

View the presentation slides.

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If you wish to receive periodic updates on this or other topics related to the pandemic, you can be added to our COVID-19 “Special Interest” mailing list by subscribing here. For any other legal questions related to this pandemic, please contact the Firm’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.

The COVID-19 crisis continues to disproportionately affect vulnerable populations across the globe. As a result, Mayer Brown has been working with its partner organizations to mobilize our resources to help the many individuals, nonprofits and small businesses hurt by the COVID-19 outbreak.

Among other pro bono efforts related to the COVID-19 crisis, Mayer Brown lawyers in the United States are working with the Fosun Foundation to help with legal issues related to the donation of medical protective equipment to healthcare providers in the New York and San Francisco Bay areas. We are providing legal assistance to the nonprofit organization Perfect Strangers, which provides delivery of groceries and other essential items to the most vulnerable members of our communities affected by COVID-19. And we are collaborating with SchoolHouse Connection, a national nonprofit that works to end youth homelessness through education, on research and policy issues to protect homeless youth during the COVID-19 crisis.

Continue Reading Mayer Brown’s Pro Bono Program Continues Its Global Response to the COVID-19 Crisis

As one of the sadder consequences of the Coronavirus pandemic, most employers are going to have to look closely at whether or not to make significant job cuts to their current headcount. While some employers may view this as an opportunity to recruit and acquire staff either generally or in particular areas, most employers are going to be looking at scheduling necessary headcount reductions. The news that there are more than 7 million people currently on the Furlough Scheme has doubtless concentrated minds on the UK Government, which is why the Coronavirus Job Retention Scheme has been extended until the end of July 2020 in its current format and is then being tapered rather than a cliff ending. Presumably some of the Government’s thinking is that some employees’ jobs may be saved, some employees’ jobs may be moved to part-time working, and to the extent that there are job losses, these will be scheduled over three months rather than one horrendous month.

To read the full update, please visit MayerBrown.com.

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If you wish to receive periodic updates on this or other topics related to the pandemic, you can be added to our COVID-19 “Special Interest” mailing list by subscribing here. For any other legal questions related to this pandemic, please contact the Firm’s COVID-19 Core Response Team at FW-SIG-COVID-19-Core-Response-Team@mayerbrown.com.

While the second round of Paycheck Protection Program (“PPP”) funding remains available for new applicants, the first round is about to enter a new phase—loan forgiveness. Under the PPP, up to the full amount of the loan may be forgiven if the borrower spends proceeds on eligible payroll, mortgage, rent, and utilities expenses in the eight weeks following loan origination (subject to certain limitations, including that not more than 25% of forgiveness may be based on eligible non-payroll expenses). Forgiveness will be reduced for employer reductions in headcount and for certain reductions in salaries/wages in excess of 25% for any employee making less than $100,000 on an annualized basis during the eight-week period as compared with pre-COVID-19 conditions. To facilitate the forgiveness process, the SBA has now issued a PPP Forgiveness Application (SBA Form 3508). Borrowers that plan to seek forgiveness should carefully review the form and its instructions in advance of submission to their lenders or current servicers.

Continue Reading US SBA Paycheck Protection Program (PPP) Forgiveness Application