The emergence of COVID-19 fundamentally reshaped our economy and the way we do business in a matter of weeks. These changes are likely to continue as the pandemic runs its course. The stresses and uncertainty brought on by the pandemic have led to unprecedented economic disruption, including to supply chains, liquidity and spending patterns. These and other factors pose a continuing challenge for many corporate directors. For financially distressed issuers, pandemic-induced changes to business operations could make recovery more difficult, and may set the standard for how their board members can and should respond to unexpected events in the future. In this chapter, we explore the duties, obligations and potential liabilities of directors of entities facing financial distress and the tools available to help organizations navigate through and out of a financial crisis.

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This chapter appears in the 2020 edition of Davies Governance Insights, our comprehensive annual report on the trends and issues most important to Canadian public companies.

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