Your management has always been sound
Formulate objectives, perform targeted analyses, draw up a concrete plan of action and then implement it step by step. That is how you have always done it.
The perspective, however, has changed drastically
Have things suddenly become different now? No, they have not, as far as Lexence is concerned. The only thing that has changed is that the economic reality within which you conduct your business has changed drastically in just a short time. After all, the Corona crisis affects almost all sections of the real economy. This means that many organisations will have to adjust to the changing economic climate.
The issues are very diverse in terms of their substance
Companies are increasingly confronted with questions that are prompted by the consequences of the Corona pandemic. For example, what is the impact on contractual obligations, what are the conditions for extra capital injections or government assistance, the possibilities of dismissal, rental obligations or buying, selling or restructuring business activities?
What are your contractual rights and obligations? Which performance must be mutually met and is this still possible? Can a change in the scope or the date of the performance be required? When is there a situation of force majeure or circumstances beyond one’s control? Who can invoke such circumstances? What are the options in terms of cancellation and termination?
The credit agreement. What are the most relevant provisions in the credit agreement in the context of the Corona crisis? What is your legal position if you suspend the interest payments and repayment obligations towards the bank? When should you contact your bank about an impending cash flow shortage? Which support measures are currently being offered by the banks for companies dealing with cash shortages?
Payments. What are the possibilities for a total or partial remission of debts? Can the collection of debts be accelerated? Which assets of the debtor are suitable for attachment? When can the bankruptcy of the debtors be petitioned? To what ex-tent are creditors obliged to accept a debt restructuring proposal?
Deliveries. You do have an obligation to deliver? Have any goods been delivered subject to a retention of title? When can the supplier invoke retention of title? Can the goods that were delivered subject to retention of title still be sold to third parties?
Raising capital. What are the options for raising funding or risk capital? Can the shareholders be obliged to pay a call on shares? What are the consequences if not all shareholders want to pay a call on shares? Are there any provisions based on which shareholders can be obliged to offer their shares in the company for sale? Have any anti-dilution clauses been agreed?
Dividend distributions. Can dividend still be distributed before the reserves evaporate? Does the company’s financial position allow for a dividend distribution? How is that determined? Can past dividend distributions be affected or reclaimed?
Restructuring. Is restructuring desirable or necessary? Can financially healthy and loss-making business units be separated? To what extent can a restructuring be effected through a merger and/or a share split? Is a national or international consolidation of group companies possible? What are the pros and cons of a restructuring?
Acquisitions. Is this the time to purchase and/or sell companies or business units? What if you are forced to do this? Do you require permission to sell business units internally (AGM or Supervisory Board) or from third parties (banks, competition authority, trade unions, works council)? Can you include additional provisions in the letter of intent or purchase agreement regarding developments as a result of the Corona crisis which you cannot properly assess at this time? Does the restructuring or sale trigger ‘change of control’ provisions in the current contracts of the company?
Relaunch. What are the options in terms of a relaunch after bankruptcy and to what extent can this be prepared before bankruptcy? To what extent will employees also transfer if business units are purchased or sold? Does this apply to outsourcing as well?
Adoption of resolutions. How can the statutory obligations to hold annual meetings to adopt the annual accounts in a timely manner and/or to appoint or reappoint directors be complied with despite the temporary emergency measures? How should quorum, voting rights and other requirements for adopting resolutions that cannot be observed due to these emergency measures be dealt with?
Compensation of wage costs. What are the conditions to qualify for the Temporary Emergency Bridging Measure to Preserve Employment [Noodmaatregel Overbrugging Werkgelegenheid, NOW] whereby the government compensates the employer’s wage costs based on loss of turnover? What is the impact on the NOW benefit when you dismiss employees?
Salary reduction. What are the possibilities to cut back on staff costs? It is possible to cut back on the terms and conditions of employment, per-haps also to prevent any forced redundancy? Is the employee entitled to postpone the payment of holiday allowance and/or bonuses? What are the options to oblige employees to take holiday?
Job cuts. How should temp agency workers, seconded employees, employees with a fixed-term employment contract and employees with an indefinite-term employment contract be dealt with? In which way should the candidates for redundancy be selected? Should a redundancy scheme be agreed pursuant to the CBA?
Consultations with works council and trade unions. Is there a works council or central works council? What is the position of the works council and to what extent should it be involved in the most important business decisions, such as implementing a reorganisation? Does a Collective Labour Agreement (CLA) apply? Are consultations with the trade unions mandatory?
Inventory of the real estate portfolio. What properties are there and what is their value? Have the properties been recently valued? How high are the property charges? When will the leases end? Which properties are encumbered with mortgages and how high is the mortgage registration? Which properties could be used as additional collateral? Are there any current leaseholds/superficies for which an increase of the ground rent/municipal fees is soon to be expected?
Restructuring. Does the real estate portfolio contain any property that was recently obtained and could possibly be resold within 6 months as a result of which transfer tax could be saved? To what extent is it possible to sell the property with-in the group to business units that are less prone to bankruptcy? Is there any redevelopment potential regarding the leased property?
Rent reduction. What if your lessee does not pay the rent or cannot pay it or pay it on time? What if you yourself are the lessee? Are there any industry-wide agreements and to what extent are these binding for you? Can you make deviating agreements?
Sub-letting and transfer. Is there a situation of subletting? Have all required permissions for sub-letting been obtained? To what extent can the lessee transfer the lease to a third party? Does the acquiring party provide sufficient safeguards for the obligations under the lease? What have the parties agreed on regarding the conditions upon delivery when the lease ends? To what extent can the lease be terminated in case of bankruptcy?
Environmental and planning law. Will you obtain the permits required for your projects in time? If not, when should you sound the alarm? What is the right course of action when ongoing objection proceedings and appeal proceedings are delayed or if you have missed a deadline to take timely legal again against decisions? To what extent do the problems relating to nitrogen and PFAS delay the decision making process? How do the new nitrogen regulations affect your projects? What is the best project planning approach now that the entry into force of the Environment and Planning Act has been postponed again?
Entering into new obligations. Can the company enter into new obligations when there is a possibility that they cannot be performed in the future? To what extent should you inform your creditors of the risk that they might not be paid on time or at all? It is allowed to give priority to creditors that are crucial for the continuation of the business operations and pay them before other creditors?
Intercompany obligations. Are intercompany agreements entered into at arm’s length? Can financially healthy group companies provide financing to less healthy group companies? How is it currently determined what market-based conditions are? Can transactions be impaired by third parties? (Actio Pauliana)?
Shareholders’ risks. Have all shares been fully paid-up? Do any obligations remain vested in the founders of the company? Has the shareholder played such a big policy-setting role that it is in fact considered as the de facto manager? What is the result of withdrawal of the comfort letter? Is there any residual liability and, if so, can it be terminated? Have previous withdrawals been registered in the commercial register?
Mismanagement. When is there a situation of mismanagement and/or personal liability of the directors? Have the annual accounts been filed in time? When must the inability to pay be reported to the Tax and Customs Administration in order to prevent directors and officers liability? If a discharge is granted, how far does it extend? What is the right course of action when the director acts on behalf of various parties in the transaction?
Absence and inability to act. What is the right course of action when a director under the articles of association and/or supervisory director unexpectedly falls ill due to the Coronavirus? How do you make sure that the business operations continue and that, now more than ever, well-considered resolutions are adopted and that the adoption of resolutions is supervised?
Articles of Association. Are the articles of association still in line with current law? Is the current flexibility offered by the law being used optimally? Is the governance in line with the current spirit of the times and the way the business is run? Does this result in risks for the stakeholders? Is it possible to improve efficiency and reduce risks?
Insolvency. When should postponement of payment or bankruptcy be petitioned? Can a company reduce its obligations by means of a suspension of payments? What exactly are the consequences of a suspension of payments? What kinds of creditors are or are not affected by the suspension of payments? What leeway do the company, directors and shareholders have on the eve of bankruptcy?