The most unexcpected effect

The pandemic and the measures imposed as a result overwrote the order of everyday life, we had to rethink our work, our social life, our shopping habits, our leisure programs and our travels, perhaps our entire value system. Governments around the world are working to reduce the negative effects of the epidemic on the economy, but these effects are still significant. Many refer to the black swan phenomenon in connection with the virus, which is a difficult-to-predict, unlikely event ("the most unexpected effect"). One thing is certain: although there are always challenges in business life, the current situation is quite special and new to everyone.

Legal support in times of emergency

The situation gives lawyers plenty of work: as a first step, we are trying to keep up with the new legislation that are promulgated in times of emergency, and to provide clear information to smaller and larger companies about the new rules.
We provide advice on how to reorganize work in the most optimal way, how to keep jobs where possible, ow to operate the company's decision-making bodies during the pandemic, and how to best use state aids. We help you if your company is unable to meet your existing contractual obligations or if your business is in a near-insolvency situation.
When concluding new contracts, we carry out a risk assessment and propose an appropriate force majeure clause.
In my opinion, there is a great need for legal professionals to restart an economy in these corona times and to reduce the effects of the negative events that took place during the crisis, and this will be a task for a long time to come. The most important thing now is to adapt to the new situation. Remember, intelligence is the ability to adopt to change.

How to keep the employees

Most businesses are now having difficulty in reorganizing their work and retaining their workforce. In the current situation, employers face two main challenges:

• How to keep the employee but how to keep him away from his workplace?
• How to terminate the employment?

A 47/2020. (III.18.) Gov. Decree made the labor law rules more flexible for the duration of the emergency, the parties may now exceptionally deviate from the provisions of the Labour Code (but it is important that the reason for the deviation can only be the observance of prohibitions and restrictions).

There are several ways to keep an employee: home office, paid or unpaid leave, paying for downtime, etting a longer working time frame, or reducing working hours so that the employee can stay away from work but still keep his or her job. The ideal solution for your business can only be decided in the light of the circumstances, each case is unique.

If redundancies are essential, care must be taken when terminating contracts, and the assistance of a lawyer is strongly recommended here. In practice, we have found that employers require us to show legal solutions that allow the parties to cooperate further in the future (eg re-employment of a worker after a crisis.)

Operation of enterprises in COVID-19 times

It is necessary to adapt to the transitional legal provisions applicable during the emergency, which means that companies have to operate differently in some respects. Company managers need to rethink their tasks and working methods, decision-making bodies cannot meet in the usual way - this must also be taken into account when approving annual reports. Under the relevant Government Decree, which entered into force on 11 April 2020, a general meeting of an enterprise cannot be held in such a way that it requires the personal participation of a member, nor does the Government Decree on access restrictions allow anyone to leave their residence for such a purpose. (An exception to this is if it is a family business and the members of the company live in the same household, or if it is a sole proprietorship - in these cases there is no obstacle to the member's decision-making.)

Based on the above, there is no change in a one-person company, the founding member makes a decision and communicates it to the management. In the case of a multi-person company, the members may make decisions either by electronic means or in writing, in this latter case without holding a meeting. This is now possible even if the company's memorandum of association provides otherwise. The management of the company is now entitled to lay down the rules for decision-making, of course only in accordance with the provisions of the relevant government decree. It is definitely advisable to seek for the assistance of a lawyer for video chat member meetings, as not knowing the detailed rules may result in the invalidity of the member meeting.

What can a company do if insolvency comes close?

If the company is unable to pay its due obligations on time, there is a risk that liquidation proceedings will be initiated against it, which could end up in the company closing down. Unfortunately, in the current crisis, companies that are otherwise financially stable might very easily find themselves in such situation. Governments around the world are seeking to mitigate the negative effects of the crisis on the economy through various suspensive decisions. Securing a payment moratorium and restructuring should be considered in most economic relationships, as creditors may not have an interest in closing down of the business or the initiation of chain reactions. The company can initiate bankruptcy proceedings, thus automatically being entitled to a payment moratorium, which gives it the opportunity to negotiate with creditors. However, a financing restructuring is conceivable without bankruptcy proceedings, based on an agreement with creditors (this is the so-called standstill agreement). If the business is otherwise on a sound footing, business plans provide a reliable chance to continue operating after overcoming temporary financial difficulties, it is likely that it will be possible to agree with creditors not to enforce their outstanding claims for a specified period. Thus, a company has the opportunity to restructure its operations and financing without being officially bankrupt, thus its reputation is not damaged.

When negotiating with creditors or drafting a standstill agreement, the interests of both the debtor company and the creditors must be represented, this is a complex situation, such contracts require professional elaboration. Should you have any further questions please do not hesitate to contact me >>