Crisis Management Checklist for CFOs
15 May 2020
The fact that the COVID-19 epidemic will have a significantly negative impact on the economy has been more or less universally accepted. According to current projections, Slovenia will face a drop in GDP ranging from 6 % (according to the Institute of Macroeconomic Analysis and Development) to 16 % (according to the Bank of Slovenia). On the other hand, negative economic effects of the epidemic will not be evenly distributed – some companies and industries will be affected directly (and, in terms of timing, sooner) while others will be affected indirectly (and later).
What all companies have in common, however, is that we are entering into a period of financial uncertainty. In this context, the two questions most frequently asked by managers of companies are the following:
1. What are my duties under Slovenian law in the context of general financial uncertainty? (see Director's Duties below)
2. What are my options under Slovenian law in terms of adjustment/restructuring of financial liabilities? (see Restructuring Toolbox below)
To facilitate the navigation through the uncertainty and a multitude of regulations concerning this topic, we have prepared a simple two-page overview – a crisis management checklist – summarising key information related to the above questions.
Furthermore, the overview lays down statutory rules enacted by the Slovenian National Assembly in the context of the anti-corona legislative package until and including the cut-off date indicated in the top right corner of the overview (i.e. including the rules which, until such cut-off date, have not yet entered into force as they have not yet been published in the Official Gazette of the Republic of Slovenia). It should be noted that these regulations will likely be subject to further changes after the stated cut-off date. Therefore, monitoring legislative changes is recommended.
Read and download the below crisis management checklist here. Available also in German and Slovenian.
Crisis management checklists for other countries available for download here: Austria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia.
Directors' Duties |
||
---|---|---|
WHAT DUTY? |
WHAT DOES IT MEAN? |
WHEN DOES IT APPLY? |
Management of business risks |
|
Enhanced scrutiny in respect |
Prohibition of unequal treatment of creditors |
|
|
|
|
|
|
|
C-19 END ** + 1 month |
|
management must file for compulsory settlement (prisilna poravnava) |
C-19 END + 3 months |
|
|
C-19 END + 3 months |
|
C-19 END + 3 months |
* ONSET OF INSOLVENCY: Deemed to have occurred when the debtor’s management should have, acting diligently, established that the debtor is insolvent within the meaning of Slovenian law. Under Slovenian law, a company is insolvent if it is either illiquid (cashflow insolvency) or over-indebted (balance-sheet insolvency).
- Illiquidity – presumed if (i) company is more than two months late with payment obligations amounting to 20%+ of its total liabilities (as per annual statements for preceding business year); (ii) balance on company bank accounts does not suffice for execution of court order for enforcement for 60 days+); or (iii) company is more than two months late with payment of minimal wages (up to the amount of minimum wage) to employees or prepayment of employees' income taxes and social contributions; or (iv) [COVID-19 Measure] the company is more than one month late with payment of wages and social contributions if state support was received within the COVID-19 emergency framework to fund these payments [Presumption applies for four months following C-19 END].
- Over-indebtedness – presumed if (i) company's liabilities exceed its assets; or (ii) current losses plus losses carried forward reach 50% of company registered share capital and cannot be covered by reduction of carry-forward profits or reserves (reduction of net assets to 50% of registered capital).
** C-19 END means the end of duration of the COVID-19 epidemic emergency legislative package (currently envisaged to stay in force until 31 May 2020). IMPORTANT: prolonged deadline applies only to companies who became insolvent as a result of the COVID-19 pandemic (this is presumed in case a company was subject to compulsory / official closure order) and, in respect of capital increase, if the requisite corporate acts could not have been adopted due to objective circumstances resulting from the COVID-19 pandemic.
Restructuring Toolbox |
||
WHAT MEASURE? |
WHAT DOES IT DO? |
WHAT IS REQUIRED? |
|
|
|
|
|
|
|
|
|
|
|
|
Read and download the above crisis management checlist here. Available also in German and Slovenian.