COVID-19 does not necessarily mean insolvency or liquidation!
Forced quarantine has lasted only a few days, but there is no doubt that it will cause financial problems for many entrepreneurs. In these difficult moments we remind you of the solutions offered by the Restructuring Law. Closed workplaces mean the inability to process orders while paying remunerations, rents, leasing fees, etc. The government announces the introduction of reductions and other exemptions from taxes or social security contributions, but for now they are only announcements, what’s more the scope of reductions will be very limited. Many entrepreneurs may soon face the specter of insolvency.
Not only the insolvent entrepreneur, but also the one who is only at risk of losing financial liquidity, can apply to the court to open a restructuring procedure. An entrepreneur affected by the effects of COVID-19 may choose, in particular, remedial proceedings. Thanks to withholding the duty to repay obligations arising before the date of initiation of proceedings and withholding enforcement actions of creditors, even those secured on the entrepreneur’s property, even by pledge or mortgage, sanative procedure might give relief for at least several months. During the proceedings, it is possible to evade the obligation to implement unfavorable contracts or reduce the number of crew on such terms as those applicable in insolvency proceedings. Thanks to this, the entrepreneur can continue operating and is not forced to declare insolency or liquidate the enterprise.
Quick action is also necessary from the perspective of managerial responsibility. For now, no legal provisions have been introduced that have temporarily suspended the obligation to file for insolvency. Such an application should still be submitted within 30 days of becoming insolvent. Non-submission of the application on time is the responsibility towards creditors with all private property, in particular members of management boards of limited liability companies and joint stock companies. At the same time, you can be released from the obligation to submit an application if you reach an agreement with your creditors in the course of restructuring in a timely manner.
Entrepreneurs interested in getting to know the details of the restructuring proceedings and conducting an examination as to whether they meet the premises for insolvency risk, are invited to contact the SDZLEGAL Schindhelm, an restructuring advisor, adv. Aleksandra Krawczyk, LL.M. corp. restruc.