COVID-19’s unprecedented and widespread disruptions to business operations have thrown many Small and Medium Enterprises (SMEs) into financial crisis. For this reason, SME owners are very concerned about labour costs, cashflow liquidity, solvency, and the going concern of their business.
Hence, the Covid-19 Temporary Measure Act 2020 (CTMA) has been issued to minimize litigation and support for cash-strapped businesses with five following elements:
The CTMA aims to minimize litigation and support for cash-strapped businesses.
In cases where the relevant contract qualifies for CTMA relief, the debtor could apply CTMA relief to receive protection from legal proceedings and other actions, such as repossession of ghttps://silvesterlegal.com/covid-19-temporary-measures-act/oods used for trade/business sold under a hire-purchase agreement.
Although the granting of the CTMA relief may have good intentions, there would inevitably be many debtors out there who would take advantage of using the statutory moratorium as an excuse to delay their payment obligations.
However, If a creditor or SME owner does not agree that the debtor is eligible for relief, the creditor can apply to appoint an Assessor to decide on this issue.
If the Assessor determines that the debtor is not covered by the CTMA, it means that the debtor will not qualify for the relief. So, the creditor has the right to commence bankruptcy proceedings against the debtor.
SME owners may consider these following criteria with the debtors to recover debts:
Due to the reduction/ cessation of business activities, SME owners are in difficult circumstances as a labor surplus, these are the following solutions for SME owners to manage the surplus employee situation:
There are many disputes that arise from the COVID-19. Specifically, SMEs engage in legal battles on whether a party is entitled to statutory relief under the CTMA.
For this reason, it is important for SMEs to obtain legal advice in order to decide whether it is commercially viable to begin or continue litigation especially when the risks may happen. Sometimes, an amicable settlement reach via mediation and negotiation may bring greater benefits for the business in the long run instead.
If you require further assistance with the COVID-19 Temporary Measure Act (CTMA) 2020 , feel free to call/ WhatsApp us at +65 90612851 or email us at email@example.com. Alternatively, you may leave us a reply using our contact form below.
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