In insolvency law, the period for a positive continuation forecast was temporarily shortened from twelve to four months. However, this special regulation expires at the latest at the end of 2023.
When energy prices rose sharply due to the Ukraine war, the federal government introduced various programs, such as the gas price brake, to help consumers and companies better endure the crisis. To support faltering companies, the period for a positive continuation forecast in insolvency law was shortened from twelve to four months. This was intended to avoid insolvencies, according to lawyer Michael Rainer, contact person for insolvency law and corporate law at MTR Legal Rechtsanwälte.
This special regulation was part of the Restructuring and Insolvency Law Crisis Mitigation Act (SanInsKG), which came into effect in November 2022. However, the regulation is time-limited and expires on December 31, 2023, at the latest. Under certain circumstances, the original twelve-month forecasting period may become relevant again as early as September 1, 2023. This is the case if it is foreseeable that an over-indebtedness will exist based on the continuation forecast, which from January 1, 2024, will again relate to a twelve-month period.
Management should already keep this in mind when planning liquidity. If an insolvency application is filed too late, it is associated with a high liability risk.
An insolvency application must be filed when the company is insolvent or over-indebted. Over-indebtedness occurs when the company’s assets no longer cover the liabilities. However, the initiation of insolvency proceedings can still be averted if the company can present a positive continuation forecast. The forecast period was temporarily reduced to four months and will return to twelve months no later than January 1, 2024.
The management must develop a financing plan. If they determine an unbridgeable liquidity gap during the forecast period, they must file for insolvency. Currently, the maximum period for filing an insolvency application due to over-indebtedness is eight weeks, but it will be reduced back to six weeks from January 1, 2024.
To avoid delayed insolvency filing, management should promptly check if a state of insolvency has arisen.
MTR Legal Rechtsanwälte advises comprehensively on restructuring options and insolvency.
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