President Danilo Medina decreed today, April 13th , 2020 the extension of the state of emergency for an additional 17 days, applicable to the entire Dominican territory as of Tuesday, April 14th .
President Danilo Medina decreed today, April 13th , 2020 the extension of the state of emergency for an additional 17 days, applicable to the entire Dominican territory as of Tuesday, April 14th .
President Danilo Medina, decreed today, April 2nd, 2020 the extension of the curfew for an additional 15 days, applicable to the entire Dominican territory. Effective tomorrow, Friday, April 3rd, all traffic and movement of people will be prohibited from 5 p.m. until 6 a.m.
1. The FASE program will grant a maximum financial aid of RD$8,500 to employees in companies who have shut their operations and have had their employees furloughed, as long as their employers are up to date with their Social Security contributions for the period of February 2020. Employees in the following sectors will not able to benefit from the FASE program:
2. Manufacturing companies and micro, small and medium-sized companies, which continue to operate with the Ministry of Labor’s authorization, will temporarily receive RD$5,000 per employee to help them meet their payroll obligations. The rest of the salary must be covered by the employer.
3. To qualify for the FASE program for the benefit of employees which will be kept on payroll, companies must not furlough employees during the following month. Furloughed workers, on the other hand, will be allowed to take advantage of the program’s benefits.
4. The Ministry of Labor may authorize FASE benefits to companies that have shut down their operations but have kept all their employees on payroll and are up to date with their Social Security contributions.
5. For furloughed employees, employers must start the process online by filling the DGT-9 form at the Ministry of Labor’s website, while that for the reduced working hours can fill out the DGT-4 form; both at the SIRLA site.
6. FASE will be active for a maximum of 60 days from 4/2/2020.
The exponential spread of CODIV-19 is seriously affecting the financial standing of businesses and individuals at a global scale, many of which have already expressed the likelihood of a potential insolvency in view of the significant reduction of their operations. In view of this situation, both corporations and individual businesspersons alike are evaluating their options and next steps to be taken both in the face of their possible insolvency as well as that of their debtors.
Restructuring Law No 141-15 regulates restructuring and judicial liquidations of both national or foreign corporations, as well as individual business persons, domiciled or with a permanent presence in the Dominican Republic. The law offers a feasible process for the restructuring of insolvent companies to ensure their operational continuity while protecting the rights of its creditors, within a framework of transparency and equality.
An application for restructuring or liquidation may be made by either the insolvent debtor itself, or by any creditor whose claims represent at least 50 minimum wages when the requirements set out in article 29 of the law are met, under the following grounds:
Another possibility for both corporations and individual businesspersons facing actual or imminently financial difficulties in the face of this health crisis and ensure the continuity of their operations is to submit a prior plan agreement to the restructuring court before the start of any restructuring process. This plan can be made with respect to all creditors or only with respect to a selected group of them, such as financial institutions, labor creditors and suppliers. In each case, the agreement requires the acceptance of creditors representing at least 60% of the total creditors or any creditors’ class in order to be approved.
This plan may address any lawful restructuring plan for the debtor’s liabilities and assets or reorganization of its business, as well as the negotiation of partial write-offs and deadline changes for the payment of the debtor’s obligations.
Once the plan has been approved by the creditors and the court, it will have the same effects as those derived from a restructuring plan. In addition, the court may order, among other things, the suspension of any enforcement proceedings against the debtor’s assets and rights. Similarly, from the time of its submission and until the application is granted or rejected, creditors cannot apply for the restructuring of the debtor.
This measure will also apply to those who will benefit from the FASE program established by the government to support workers who have had difficulties to maintain their operations.
The Judicial Branch Council recently announced their latest measures in response to the COVID-19 pandemic:
With the recent declaration of a State of Emergency in the Dominican Republic decreed to curb the spread of COVID-19, labor relations have been and will be considerably affected, since part of the measures taken by the Dominican State include the temporary closure of public and private companies and entities, as well as the closure of all borders.
In order to reduce the impact of the current crisis on the country’s main productive sectors and their collaborators, the Dominican government recently created the Employee Solidarity Assistance Fund (FASE), which will basically provide for a subsidy for the payment of employees’ salaries in order to help companies with their April and May 2020 payroll obligations. The aid will cover monthly salaries of up to RD$8,500 per employee, on the condition that the employee is kept on the company’s payroll.
The FASE program will be rolled out next Thursday, April 2nd. On this date the Dominican Government will enable online access for all companies to submit their applications; therefore, we invite you to consider this opportunity promptly, so you are able to apply in time and benefit from the program.
For more information about the FASE program and other news related to the Dominican Government measures to counter the effects of the COVID-19 pandemic, please visit our COVID-19 Resource Center.
Should your company decide to apply for the FASE program, Guzmán Ariza is fully prepared to assist you with the required application process.
As news of the first confirmed case of the novel coronavirus outbreak in the Dominican Republic began to surface publicly on March 1st , 2020, our firm began a thorough revision of all the aspects of business and everyday life that might be affected by such a quick-spreading virus and to evaluate how we can mitigate its effect among our staff and clients, our close families and the communities in which we are involved, in a way that we can maintain our people safe and still provide our renowned high-standards of service to our clients.
We have been monitoring local and international health authorities, such as the World Health Organization (WHO) and the Dominican Ministry of Health, as well as implementing the best practices put forth by the international medical community, in order to make informed decisions that will positively impact our business.
Take care of yourself and your loved ones, and keep safe and healthy.
Fabio J. Guzmán Saladín
Managing Partner
Guzmán Ariza, Attorneys at Law
It is an undisputed fact that the usual course of commercial operations have been significantly altered in the Dominican Republic after the Executive Branch declared a State of Emergency to curtail the massive spread of the coronavirus COVID-19 and put into effect restrictions on freedom of transit, assembly, and commerce, all in accordance to Presidential Decree 134-20 of March 19th, 2020.
The Executive Branch has taken a series of measures under the declared State of Emergency to prevent the spread of the virus, including the shutdown of most private businesses as well government institutions that do not offer basic services, strict curfews, closing of the Haitian border, the prohibition of international flights, among others.
These extraordinary measures taken by the Dominican government can be considered as unforeseen acts by parties who have entered in good faith into contractual obligations of any nature prior to the pandemic, which can hinder their ability to fulfill said obligations and force them to be in breach of contract. Due to this unfortunate situation, some of our clients have already asked us if the occurrence of force majeure or acts of the State can be used to excuse a party’s breach of its contractual obligations under the current national State of Emergency.
Under Dominican law, the occurrence of force majeure is considered a valid cause under which a party to a contract may be exempted from fulfilling their contractual obligations and, therefore, from being liable for breach of contract. For the non-performing party to be excused because of force majeure, the event or act producing the force majeure must be both unforeseen, inevitable and irresistible.
Acts of the State or sovereign acts, if unforeseen, inevitable and irresistible, have the same effect as force majeure.
In both cases, the breach must be evaluated in an abstract manner, that is, the party in breach must prove that their inability to comply with its obligations would have been the same for anyone else in similar conditions or circumstances.
It is likely that any party that has not been able to perform or has had to delay their contractual performances under the current state of emergency may avoid being considered in breach of contract and be subject to liabilities derived from such breach based on either of the causes mentioned above.
In the event of these causes, the default status can be considered as temporary or permanent; that is, the party could seek to delay its performance under the contract or delay it until the cause has ceased to exist.
Guzman Ariza is available to assess any case of contractual breach, actual or potential, in these difficult times. Feel free to contact us to discuss any specific inquiries.