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Welcome / Blog Archive / English / 2020-04-doc4 Model Standstill Agreement may assist in COVID-19 times

2020-04-doc4 Model Standstill Agreement may assist in COVID-19 times


In these extraordinary, unprecedented times two US lawyers (prof. Jonathan Lipson and Norman Powell) felt they need to do something to avoid disastrously contractual fights between parties resulting in overburdening the court system. Published under the auspices of the Business Law Section of the American Bar Association (ABA) they published a model standstill/tolling agreement. In stead of ending up in short term rather meaningless commercial litigation, the model may remove legal and emotional pressure and preserve the status quo. Based on the model as a starting point, parties can discuss and agree on ‘standstill issues’ and the ‘standstill period’. The model ‘freezes’ legal actions and actions of a nature of non-ordinary course of the debtor’s business. In the end the goal is to allow parties to establish a mutual acceptable, contractual and temporary workout that removes the need for litigation and, ideally, preserves during these unpredictable times an a best as possible commercial and  economic relationship. If only to counteract the sense of powerlessness many lawyers will feel in the face of severe uncertainty about what the post-corona business world will look like, the drafters set a beautiful example and deserve honor and respect for it.