Contentious competition proceedings are on the rise. At Linklaters, our dedicated competition litigation team has been busy dealing with a marked increase in the number of judicial review actions challenging regulatory decisions, in particular in recent times in relation to merger decisions and related procedural infringements, with collective actions also on the rise in the private sphere. These trends are set to continue over the next few years, with Brexit likely to result in an increase in larger, complex cases and parallel damages actions in multiple jurisdictions. Continue reading “Appealing a decision by the CMA in a merger review”

While it has been in place since 1990, the legal framework governing bankruptcy and restructuring in Oman underwent a qualitative change in 2018 and 2019 with the issuance of the new Criminal Law (Royal Decree (RD) 7/2018) (the Criminal Law) and the Bankruptcy Law (RD 53/2019) (the Bankruptcy Law), which may have a significant impact on the approach taken by commercial debtors experiencing financial difficulties. The Bankruptcy Law is a standalone law that supersedes its predecessor ie the insolvency law set out in Chapter V of the Commercial Law of Oman (RD 55/1990) (the Commercial Law). Continue reading “Changes to the bankruptcy and restructuring legal framework in Oman”

In order to merge well, one must merge wisely. This requires the application of a two-step approach: first, a methodically conducted preparation of the filing by close interaction with all parties involved (both on factual and legal grounds), and secondly, a notification procedure which is being handled in a responsible, transparent and trustworthy manner vis-à-vis the respective authority. Continue reading “Merge well, merge wisely: getting the deal through”

European distressed debtors and creditors face uncertainty regarding English law-governed debt and, more generally, their overall restructuring strategy. This uncertainty arises against the backdrop of the UK’s imminent departure from the EU, the Covid-19 pandemic and turbulent markets. Many major out-of-court or in-court European debt restructurings use English law governed loan debt and Luxembourg-based debtors, which are frequently used as borrowers or bond issuers in international corporate groups. Continue reading “Post-Brexit recognition of English insolvency judgments in Luxembourg and its effects on European restructurings”

What to do for an employer that has a suboptimal relationship with an underperforming employee but that has not fully documented the underperformance and its efforts to improve performance, while there may still be a chance that the relationship gets better? Continue reading “The cumulative dismissal ground; a solution or just an illusion?”

The Ministry of Health, Labour and Welfare of Japan (MHLW) announced on 11 September 2020 that the number of employees who have been terminated (or will be terminated) from their employment in connection with the Covid-19 pandemic had reached 54,817 (including 25,334 non-regular employees). The Covid-19 pandemic continues to have a significant impact on the work environment in Japan. Many employers were forced to reduce their workforce or make wage cuts despite strict regulation of such workforce reduction and wage cuts in Japan. The Covid-19 pandemic also required companies to introduce new working practices, such as remote working or procedures in the work environment that prevent the spread of Covid-19. Continue reading “Covid-19: employment issues under Japanese labour law”

Company acquisition and restructuring often bring about a change in the acquiree’s business strategy, direction, organisation and personnel structure. These can affect the employment relationship between the acquiree and its employees as well as sometimes the employment affairs of the acquirer. Acquisition can be divided into asset acquisition and equity acquisition. This article analyses how the employment relationship should be handled in these two types of acquisitions, according to the labour and employment legislation of China’s mainland and judicial practice there. Continue reading “The employment relationship in company acquisition and restructuring in China”

On 16 March 2020, the Austrian government imposed drastic measures to contain the SARSCoV2 virus, commonly known as Covid-19. The international Covid-19 crisis resulted in a seven-week complete lockdown in Austria, with only ‘critical infrastructure’ such as banks, supermarkets, pharmacies and hospitals remaining open for business.

Simultaneously, the Austrian government applied several economic measures, attempting to cushion the severe impact of the lockdown for the Austrian economy. Austria quickly set up the Covid-19 Finanzierungsagentur des Bundes GmbH (COFAG) commissioned with ‘the provision of services and the taking of financial measures necessary to maintain the solvency and to bridge liquidity difficulties of companies in connection with the spread of Covid-19 and the resulting economic effects’, which was equipped with a total financial framework of €15bn. COFAG’s central financing instrument is the issuing of bridge guarantees for up to 100% of the credit value applied for at banks as well as the granting of fixed-cost subsidies. COFAG does not grant any financial aid to undertakings considered to have been in financial difficulties before the onset of the Covid-19 pandemic.

In addition, after these initial emergency measures the Austrian legislator adopted numerous legislative changes, also in the field of insolvency law, to mitigate the economic impact of the coronavirus crisis.

Legal changes in insolvency law due to the Covid-19 pandemic

Duty to file for insolvency

The Austrian insolvency regime differentiates two scenarios, each of which leads to an obligation to file for insolvency under the Austrian Insolvency Act.

Illiquidity

Illiquidity is assumed, if the debtor is unable to pay more than 5% of its due (monetary) liabilities and cannot obtain the necessary means of payment in the foreseeable future.

Over-indebtedness

Over-indebtedness occurs, when a company is both arithmetically over-indebted (ie the liabilities of the debtor exceed its assets) and a positive going-concern prognosis is not feasible.

When Austrian companies are either illiquid or over-indebted, their respective management is obliged to file for insolvency proceedings immediately, and at the latest within 60 days after the insolvency was triggered if the management took reasonable, yet unsuccessful restructuring measures to prevent insolvency. If the debtor’s insolvency is caused by a natural disaster such as the coronavirus, the 60-day period is doubled to 120 days. In the course of the Covid crisis the Austrian legislator clarified that also epidemics or pandemics lead to an extension of this period to 120 days.

In addition, the Austrian legislator temporarily suspended the obligation to file for insolvency due to over-indebtedness until 31 January 2021, if the over-indebtedness occurred in the period between 1 March 2020 and 31 January 2021. If a debtor is over-indebted at the end of 31 January 2021, it must file for the opening of insolvency proceedings without undue delay, but at the latest within 60 days after 31 January 2021 or 120 days after the occurrence of over-indebtedness, whichever period ends later.

Shareholder loans

In order to increase the willingness of shareholders to contribute to restructuring measures of insolvency-endangered companies, the Austrian legislator also provided for simplifications in the otherwise rather strict Austrian equity replacement legislation. While monetary shareholder loans would usually be considered equity replacing and therefore subordinate to creditor claims in insolvency proceedings if given for more than 60 days, such shareholder loans can now be granted for up to 120 days until 31 January 2021 and will not be considered equity replacing and thus not subordinate to creditor claims.

Financing of salaries of employees on short-time work

Bridge loans used to pre-finance salaries of employees on short-time work, which were taken out in the period between 1 March 2020 and 31 January 2021, and immediate repayment of such loans upon receipt of the short-time work subsidy, are not subject to Austrian insolvency voidance, if neither a pledge nor comparable security from the borrower’s assets was provided for the loan and the lender was not aware of the borrower’s insolvency when the loan was granted. This legislative initiative aims at further strengthening the willingness of banks to support companies through the Covid-19 crisis and save jobs at the same time.

Effects of the coronavirus pandemic on the number of insolvencies

The measures adopted by the Austrian government to mitigate the economic impact of the Covid-19 pandemic resulted in the number of insolvent companies in the first half of 2020 being significantly lower than in the same period in 2019 (by about 25%). However, at the same time the overall liabilities involved in insolvency proceedings increased by about 86%. This shows that larger companies, which tend to file for insolvencies themselves, also did so in the course of the Covid-19 crisis, whereas tax authorities as well as the health insurance institutions, which apply for the opening of insolvency proceedings in most cases involving smaller liabilities, have not filed for insolvency as frequently since the outbreak of the coronavirus crisis.

Outlook

While the first few months after the lockdown were all about cushioning the severe economic impacts of the Covid-19 crisis, the next phase will be all about getting the economy back up and running as quickly as possible. The Austrian government has already taken measures, introducing the ‘investment premium’, equipped with a financial framework of €1bn, which was quickly depleted and is currently under discussion for an increase. The investment premium can be applied for by all companies which do not fulfil insolvency criteria. Eligible are new investments in depreciable fixed assets at Austrian business premises of a company, for which the Covid-19 investment premium has been applied for between 1 September 2020 and 28 February 2021. Additionally, the investment measures have to be taken between 1 August 2020 and 28 February 2021. The amount of the premium is 7% and increases in the investment areas of green technology, digitisation and health up to 14 % of the investment with an upper limit of the calculation basis of €50m.

At the moment, the number of coronavirus infections is increasing. It is not foreseeable whether there will be a further lockdown, but it is clear that another lockdown would lead to further slumps in the Austrian economy that will need to be kept in check with additional legislative measures.

One of the things the Covid-19 pandemic has taught us is that most work can be performed remotely. But even before worldwide lockdowns, some individuals have been using technology to replace their offices with exotic locations around the world. They are ‘digital nomads’ and their numbers have been increasing rapidly in the last couple of years. Continue reading “Digital nomads, welcome to Croatia – new regulation of foreign nationals’ residence introduced”

The Covid-19 pandemic has presented numerous new challenges to companies across the world, including in Norway. A number of new issues and problems had –and still have –to be assessed and addressed at a very short notice. The large volume of new temporary legislation has targeted some of the immediate issues companies were faced with. Apart from this, we have seen that many companies have had a sudden need to make changes affecting employees in response to the pandemic. The boundaries of the employers’ right to manage have thus been at the heart of many legal issues within employment law this year. Below, we will give an overview of the general principles of the right to manage and highlight some of the issues that have been raised during the Covid-19 pandemic. Continue reading “The ‘new normal’: the scope for adapting the ways we work as the Covid-19 pandemic continues”

If it could be said that the Covid-19 epidemic had any merit, it would be its unequivocal demonstration that many work activities don’t need to be performed in a workplace. Continue reading “Remote working: Lavoro agile needs to remain flexible to be smart”

If you were asked to name a well-known example of a class action, the first one to spring to mind might be Hollywood’s Erin Brockovich, based on the true story of a Californian community that claimed for damages against an energy corporation for suspected groundwater contamination, and secured a multi-million-dollar settlement. Although the likes of Brockovich and John Grisham have brought class actions into popular culture, the UK, particularly the English courts, have a long-established procedure to accommodate these cases. Scotland too, has now entered this area of law, having introduced class action rules this summer. Continue reading “Class actions in the UK: preparing for a changing landscape”