27 Mar Germany plans to suspend obligation to file for insolvency due to corona epidemic
27/03/2020 On 25 March 2020, the German Bundestag unanimously passed the draft law to suspend the obligation to file for insolvency until 30 September 2020 in order to protect companies that get into financial difficulties as a result of the corona epidemic (the Bundestag communication of 25 March 2020 can be found here; the draft law of 24 March 2020 can be found here). The Bundesrat approved the draft law in a special session on 27 March 2020.
The core elements of the draft are:
- The obligation to file for insolvency is suspended until 30 September 2020 (the deadline can be extended to 31 March 2021 by statutory order).
- The suspension of the obligation to file for insolvency does not apply if the insolvency is not caused by the consequences of the spread of the SARS-CoV-2 virus or if there are no prospects of eliminating an existing illiquidity.
- If the debtor was not insolvent on 31 December 2019, it is assumed that the insolvency has been caused by the effects of the COVID 19 pandemic and there are prospects of eliminating an existing illiquidity.
- Relief from liability for managers for payments after insolvency has occurred.
- Restriction of insolvency administrators’ claw back rights
- The right of creditors to file for insolvency is restricted for a period of three months, unless the debtor was already insolvent on 1 March 2020 (the three-month period can be extended to 31 March 2021 by statutory order).
The law is scheduled to come into effect from 1 March 2020, but still needs to be executed by the Federal President and promulgated in the Federal Law Gazette.
We will update this post when more details emerge. Please contact us at JP Rechtsanwälte if you need help.