International Insolvency Institute NextGen Program Insolvency and - - PowerPoint PPT Presentation

International Insolvency Institute NextGen Program Insolvency and restructuring in the time

• f Covid-19

June 4, 2020 Focus on ASIA

PROGRAM

Opening remarks: Annika Wolf, Executive Director of the International Insolvency Institute Introduction of the NexGen webinar project Carlo Ghia, Ghia Law Firm - Italy Work Session moderated by Carlo Ghia: Jason Corbett – Silk Legal - Thailand Shuai Guo - PhD candidate at Leiden Law School - China Ming Dong - JunHE LLP - China Aurelio Gurrea Martinez - Singapur Management University Q & A – instructions for the attendees: if you want to ask questions during

the session, you can use the «Q & A» section of Zoom. The moderator will pose the questions at the end of the recorded session

The State of Blockchain during COVID-19:

• Dr. Jason Corbett

Managing Partner, Silk Legal

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Bankruptcy Proceedings in Thailand

Thailand’s bankruptcy proceedings are governed by the Bankruptcy Act (No. 7) B.E. 2547 (2004).

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Generally-speaking, a distinction is made between secured creditors and unsecured creditors where the former is given priority. Thai courts assign an official receiver (who functions as an administrator) that is responsible for managing the debtor’s affair, specifically those concerned with the collection of assets that may be used to repay debts. Once the official receiver seizes control of the debtor’s assets, as order must be made publicly in the Royal Thai Gazette and a widely circulated publication.

Limitations of Thailand’s Bankruptcy Regulations

Given the lack of mechanisms that facilitate cross-border insolvency matters, the current regulations may prolong, complicate, or jeopardize restructuring efforts. Thailand uses a territorial approach when handling cross- border matters and does not accept rulings from other jurisdictions – although these will be accepted by courts as evidence. So far, the Thai government has not made any announcements regarding the possibility of amendments to these regulations in response to the COVID-19 pandemic which may be problematic for estates that involve foreign creditors.

Contextualizing Blockchain for COVID-19

The pandemic has brought to light the general lack

• f connectivity and data exchange to respond to a

global outbreak.

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Key players in the blockchain sector state that future resiliency is contingent on creating transparent and inter-operable networks.

Advocating for connectivity and transparency

What problems can blockchain solve?

Providing ways to share immutable data without compromising privacy. Ensuring efficiency in keeping track of COVID-19 infections. Building resilience in terms of supply chain to combat the economic effects of the pandemic. Connecting various shareholders to essential services when needed.

The Giants make their move

Contact Tracing

The World Health Organization defines contact tracing as the process of identifying, assessing, and managing people who have been exposed to a disease to avoid transmission to others.

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In the context of COVID-19, contact tracing involves identifying people who may have been exposed to the virus and conducting daily updates for 14 days from the last point of exposure.

What is Contact Tracing?

In April, Google and Apple unveiled a two-phase exposure notification solution that uses Bluetooth systems on mobile devices to assist in contact tracing efforts. Through this, users’ devices will regularly send out beacons that confirm whether a person had prior contact with COVID-19. These beacons are made of a string of random numbers that are not tied to a person’s identity in order to preserve their privacy. Google and Apple have released APIs that enable contact tracing apps from public health bodies to work on Android and iOS devices. The second phase of the joint project will involve introducing the initiative at the operating system level to ensure adoption among users. The latest iOS 13.5 update on iOS devices has implemented this capability.

Immunity Passports

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Necessary after the pandemic?

After the pandemic, authorities around the world may use immunity passports to permit those who were infected to go back to work or travel.

COVID-19 secured health passport

French data leader OpenHealth, along with EU blockchain-based trust service Guardtime and SICPA, have formed a consortium to develop a system to monitor the population’s state of immunity. The use of blockchain will ensure the accuracy of health data to assist in managing the deconfinement process while preserving the privacy of data holders.

*Source: SICPA (https://www.sicpa.com/news/covid-19-health-passport- secured-blockchain-enable-deconfinement)

Applications around the world

In the context of COVID- 19

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Digital channels for government services Identification system

UAE’s Ministry of Community Development has started using blockchain systems to digitally authenticate official documents and

• certifications. This was done in order to

streamline services and reduce the need to visit government offices. Singapore’s Ministry of Health developed the TraceTogether app as a community-driven approach to enabling proximity information exchange among participating

• devices. The app aims to map out

the activities of infected individuals to help health officials serve them better.

Providing Information

Italian news agency, using EY Advisory’s blockchain expertise, developed an application that verifies sources of information about COVID-19 in order to curb the spread of fake news which could exacerbate the contagion.

Stablecoins

Stablecoins are cryptocurrencies that are pegged to real-life assets, particularly major currencies like the US Dollar and commodities such as gold or oil.

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Stablecoins fall under 3 primary categories:

Fiat-collateralized stablecoins Crypto-collateralized stablecoins Non-collateralized stablecoins Stablecoins that are typically pegged to fiat

• currencies. An example of this is USDC which is

pegged to the US Dollar. Stablecoins overcollateralized against loaned

• assets. An example includes MakerDAO.

These are neither centralized or over- collateralized and are instead reliant on contractions and expansions on the token supply based on an algorithm.

These cryptocurrencies have surged in popularity due to their relative stability in comparison to other cryptocurrencies.

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Discover theworld at Leiden University

Responses to COVID-19 in China

Presentation at NextGen/III Webinars: Insolvency and Restructuring at the time of COVID-19

Shuai Guo 郭帅| Home 4 June 2020

Company Law/Hazelhoff Centre for Financial Law

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Discover theworld at Leiden University

COVID-19 cases in China

Source: Worldometer

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Discover theworld at Leiden University

Economic activities in China

Source: National Bureau

• f Statistics of China

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Discover theworld at Leiden University

Central Government Measures

Employment Protection of employees

• Protection from layoff
• Minimum wage
• Choice to work from work
• Safe and healthy working

environment Protection of business

• Companies can negotiate

with employees to reduce their salaries Business Tax incentives

• Tax reduction
• Tax exemption
• Tax refund
• (rent/lease exemption)

Finance

• Direct capital injunction (to

commercial banks)

• Extension of repayment

periods

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Discover theworld at Leiden University

Courts: SPC’s Representative Cases

• 1: Courts speed up the hearing process.
• 2: Courts resolve disputes related to essential services.
• 3: Courts act as mediators for parties to reach a settlement agreement.
• 4: Courts facilitate restructuring proceedings.

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Discover theworld at Leiden University

Thank you! s.guo@law.leidenuniv.nl

Measures from Chinese Courts Dealing With Covid-19

• ---Insolvency Scenario

Ming Dong Partner of JunHe LLP

Major Measures

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• Issue Guiding Opinions Concerning the Proper Trial of Civil Cases Involving Covid-19 by

Supreme People's Court

• Guiding resolving the debt crisis by out-of-court restructuring
• Carefully determining the cause of bankruptcy according to law
• Extending the statutory periods
• Issue Notice of Strengthening and Regulating the Online Litigation Work by Supreme

People's Court

• Online filing cases
• Issue Opinions on Promoting the Efficient Trial of Bankruptcy Cases by Supreme People's

Court

• Hold creditors’ meetings through network
• A fast trial mechanism for simple cases – 6 months

• 1. Guiding Opinions Concerning the Proper Trial of Civil Cases Involving Covid-19

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• On 15th May, 2020, the Supreme People's Court issues Guiding

Opinions on Several Issues Concerning the Proper Trial of Civil Cases Involving Covid-19 II, in which the third part specifically stipulates the trial of bankruptcy cases involving Covid-19.

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• Highlights:
• Guide creditors and the debtor to resolve debt crisis out of court.
• Determine the cause of bankruptcy according to law carefully.
• Extend the statutory period for submitting reorganization plan, creditors’

claim declarations, holding creditors’ meetings, holding a hearing etc. according to specific situations.

• Maintain to the maximum possible extent the capability of the debtor to

continue its operation, give full play to the benefits of the financing of common benefits debt, and provide funding support for the debtor to continue its operation.

• 1. Guiding Opinions Concerning the Proper Trial of Civil Cases Involving Covid-19

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• 2. Notice of Strengthening and Regulating the Online Litigation Work
• Carrying out online litigation activities comprehensively
• Activities involving bankruptcy cases: online filing, filing a demurral

by debtors etc.

• Preventing the negative influence on the judicial efficiency and

the unnecessary litigation burden for the parties

• Examine the application materials within seven days upon receipt
• No longer request parties to submit the original paper documents

• 2. Promote online filing services in bankruptcy cases

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• Online litigation platforms:
• China Mobile Micro Court
• Litigation Service Network
• 12368 Litigation Service Hotline
• The people's courts at all levels:
• Improve the online handling procedures and online litigation procedures
• Develop and issue convenient and feasible online litigation operating

guidelines with comprehensive contents and clear guidelines

• 3. Opinions on Promoting the Efficient Trial of Bankruptcy Cases

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• Holding creditors’ meetings through network

Specific measures:

• Administrators playing important a role
• Regulate meeting procedure rules
• Clarify the application scope for delayed voting
• Strengthen technical support
• A fast trial mechanism for simple cases – 6 months

Warren X. HUA

Tel: (85-10) 8519 2189 Fax: (86-10) 8519 1350 E-mail: huaxj@junhe.com

Thank You! dongm@junhe.com

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The Singapore insolvency response to the COVID-19 crisis

Aurelio Gurrea-Martinez Singapore Management University - School of Law aureliogm@smu.edu.sg

• 1. Introduction
• Legal response: The Covid-19 (Temporary Measures) Act
• Goal: providing companies with a breathing space while minimizing intervention in

private contracts. It seeks to serve as a ‘legal circuit breaker’: a time-out until the virus dies out, and then contracts, like life, can return to normal (Minister K. Shanmugam)

• Content: contracts, insolvency and beyond
• Scope: temporal limitations, focus on SMEs, certain contracts, legal actions and

industries

• Economic and financial responses: USD$92.9B (~20% GDP), including wage

subsidies, government-supported loans and cash payouts.

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• 2. Temporary changes to the insolvency

legislation

• Restriction of creditors’ rights to initiate insolvency proceedings
• Increased threshold: from S$10,000 to S$100,000 (companies)
• Statutory period to respond to demands: from 21 days to 6 months (companies)
• Liability for wrongful trading does not apply if new debts are part of the debtor’s ordinary

course of business

• Extension of lookback period for avoidance actions if debtor enjoys pre-insolvency

moratorium against legal actions

• Insolvency-related reforms
• Pre-insolvency moratorium against legal actions and termination of contracts
• Facilitation of workouts

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• 3. The role and limits of insolvency law
• The role (and value) of the law of corporate reorganizations:
• Minimizing destruction of value: moratorium, priority given to new suppliers,

avoidance actions, directors’ duties and liability, supervision by third parties, prohibition of ipso facto clauses, rescue financing…

• Facilitating

a financial restructuring: adequate forum, majority rule, cramdown…

• Still, there are some limitations:
• Are those functions really achieved under a particular insolvency regime?
• Can the judicial system absorb the wave of insolvency cases?
• Is the insolvency system appropriate for all types of debtors?
• Is the existing insolvency framework appropriate for the current situation?

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• 4. International responses vs Singapore

 Suspension or restriction of creditors’ right to initiate insolvency proceedings ✅  Suspension of directors’ duties to initiate insolvency proceedings

N/A

 Suspension or relaxation of the liability for wrongful trading

✅

 Pre-insolvency moratorium against legal actions and the termination of contracts ✅  Facilitation of workouts ✅  Suspension of the ‘recapitalize or liquidate’ rule N/A  Increasing use of electronic communications ✅  Amendments to transaction avoidance rules ✅  Facilitation of rescue financing N/A  Special rules for small companies ✅  New measures to reduce the length of insolvency proceedings X  Suspension of the subordination of loans by corporate insiders N/A  Suspension of debtors’ right to initiate insolvency proceedings X Source: Gurrea-Martinez et al, Global Guide: Measures to support distressed businesses: Report, INSOL-World Bank (2020)

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• 5. Conclusion
• Insolvency law is not the panacea. A comprehensive package of legal,

economic and financial reforms is required. Still, insolvency law can be helpful:

• Ex ante: it may facilitate renegotiations and workouts
• Ex post: it may preserve value while facilitating a financial restructuring
• The Singapore response to the COVID-19 crisis has been one of the most

comprehensive ones observed internationally. However, there are still some challenges ahead.

• Limited capacity of the judiciary?
• Post-COVID situation ?

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