A useful measure of whether someone has real expertise is whether they do not start each sentence with “so”
Another good marker is the use of ‘simples’. It usually means the user hasn’t appreciated the complexity of whatever they’re talking about.
From a business survival point of view, this may well be the right decision – if this forced interest free loan makes the difference between bankruptcy and survival, this may even be best for the creditors overall, which will all get their money eventually.
How can this not be some kind of bankruptcy fraud?
Only if the business goes under. Then it would be trading while insolvent. Exactly what that means depends on the country, the directors would have to show that overall they acted in the interest of the creditors, and that they did not favour any creditors over others. So ironically if he screws all creditors equally, that would be ok… [tongue-in-cheek-icon here]
kwlf wrote:
If there is harm from Hydroxychloroquine it is probably as much from people having put too much faith in it, as much as any direct toxic effect.
What do you think of the FDA move to approve remdesivir by emergency approval apparently in exchange for 1.5 million free doses provided by the manufacturer? Is this kind of an extended clinical trial kind of environment?
I have heard that remdesivir was also used here in Switzerland in the University clinics for very severe cases, but am not sure how that medicine is approved or if it is approved at all or still in experimental stage for Ebola cases. As Ebola is not exactly a very wide spread disease, possibly it was not even possible to get the necessary numbers for a proper study? How would the medical community deal with this kind of drug which appears to be helpful but is not approved?
Then it would be trading while insolvent
The UK govt has exempted a Director from criminal liability for this one, backdated to 1st March, to reduce the number of companies which go bust.
Ryanair is not a UK company, of course.
Peter wrote:
The UK govt has exempted a Director from criminal liability for this one, backdated to 1st March
They announced that they will exempt directors from their personal liability for company debt in these instances. In the UK, directors only face criminal sanctions if there is an intent do defraud creditors.
But nobody knows exactly what they will be exempt from. They will certainly be allowed to trade and take on debt even if they can’t say with sufficient certainty that the company will be able to pay. They will also almost certainly NOT be allowed to pay money to themselves or connected persons in preference of other creditors or under value. Whether they are allowed to discriminate between creditors remains to be seen, although it would be beneficial to the company because it can keep paying suppliers who have leverage (fuel suppliers, airports, utilities, staff in Ryanair’s case) before those who don’t (passengers, landlords).
That is the UK position – does anyone know the position in Ireland?
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There are a few other laws they could change / suspend… abolishing the requirement for consultation in case of redundancy, and shortening of notice periods for staff.
A mid-size company with an average staff notice period of 3 months facing a 50% reduction in trade will need to start the process of firing a large chunk of their staff four months before it runs out of cash. If consultation is abolished and notice reduced to one month, it has three more months. In both cases, the employee will leave at the same time and receive the same money, but has a higher likelihood of remaining employed if/when things recover, and a lower likelihood to end up in a company going bust.
There is no law in the UK saying the company must be able to pay all its creditors at any time.
Most companies would not meet that test most of the time – because they are relying on debtors to pay up. If all the debtors went bust suddenly, most companies would fold.
The criminal action is trading while insolvent, which AIUI is a strict liability.
It’s always been a bit dodgy to milk a company which cannot pay its debts, because the administrator could take legal action to recover the money, but it’s not a precise thing. For example you can draw your normal salary until the very end.
This is quite interesting. It’s well reported but unfortunately the Daily Trash is the only version I can find not behind a paywall.
There is no law in the UK saying the company must be able to pay all its creditors at any time.
True. a company is becomes insolvent if it cannot pay its debts as they fall due, there also is he second test that it is insolvent if the total liabilities exceed the total assets.
But that is the point when the company should enter liquidation. Wrongful trading starts when “the directors knew, or ought to have concluded that there was no reasonable prospect of avoiding insolvent liquidation”.
There is no criminal sanction for getting that judgement wrong, but he civil sanction of making the directors liable for any debt incurred in the 6 months up to the insolvency if they allowed the company to trade wrongfully is ruinous. They might also be disqualified as directors (rarely). Criminal sanctions only apply in cases of fraud.
At this point, many haven’t got the foggiest how this will pan out, so the government relaxing the rules around wrongul trading, so directors can run companies a lot closer to the wire or even right into bankruptcy in hope of recovery than would normally prudent.
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With regard ro Ryanair – they clearly are not paying their debts as they fall due. But that does not mean they are trading wrongfully, because they probably could if they wanted. The just choose not to pay, entirely in line with the general ethics of that company
Lots of companies are pushing the boundaries at the moment, seeing what they can get away with in terms of not paying what is due.
I have if from an insider that some large high street chains will not be paying the rent for the next quarter. The attitude towards the landlord is basically “what are you going to do about it?”
My own employer has done something quite naughty with respect to salaries. It all comes down to whether you think you can exploit an imbalance of power in the contractual relationship.
The attitude towards the landlord is basically “what are you going to do about it?”
I think that’s fair enough, because “we” are all in the same boat, and it would be wrong for the landowners to not carry any risk.
The local councils have always been happy to run their business rates payers right on the knife edge…
