COVID-19 & insolvency law
The drastic repercussions the coronavirus pandemic is having on public life mean firms are finding themselves – sometimes astonishingly quickly – in serious financial difficulties, it being necessary, for instance, for them to comply with official directives.
For those facing an existential threat to their businesses, the changes to the obligation to file for insolvency at least afford them significantly more time to manage the crisis. Prior to the spread of the coronavirus, a delay in filing for insolvency was treated as a criminal offense. On March 23, the COVID-19-Insolvenzaussetzungsgesetz (COVID-19 Stay of Insolvency Act) was published.
It deals with
- changes to the obligation to file for insolvency
- liability for illegal payments following the onset of insolvency
- the protection of certain transactions from revocatory actions
- petitions for insolvency proceedings brought by creditors
- interdiction of payment
- the exclusion of actions challenging debtor transactions
The Act also introduces extensive changes to the German Code of Criminal Procedure (Strafprozessordnung, StPO) with respect to the suspension of the main hearing while protective measures in response to the coronavirus pandemic are in place. Essentially, the obligation to file for insolvency is initially suspended until September 30, 2020. Please note: Only those businesses that find themselves in a precarious situation due to the measures or the impact of the coronavirus pandemic are exempt from the reporting requirements. If other factors led to insolvency, it needs to be reported in the usual manner. However, a simplified approach is taken in this case: If the debtor was not insolvent on December 31, 2019, then the insolvency can be attributed to the effects of the coronavirus pandemic.
We at the commercial law firm MTR Rechtsanwälte note that affected businesses should nonetheless be able to fully account for why they did not file for insolvency and explain how the insolvency stems from the consequences of the present crisis..
Lawyers with experience in the field of insolvency law can offer advice.
More information about the crisis surrounding the coronavirus is available here!
