Information on the obligation to file for insolvency

Suspension of obligation to file for insolvency for illiquid companies

In order to protect companies that run into financial problems due to the corona pandemic, the Federal Ministry of Justice and Consumer Protection is preparing a legal regulation.

The German government has announced that it will provide various instruments to support the liquidity of companies that run into financial difficulties due to the effects of the corona pandemic.

Since the regular three-week period of the Insolvency Code is too short until the aid packages actually reach the affected companies, a suspension of the obligation to file for insolvency until September 30, 2020 should apply to these companies.

Because, in the current situation, the processing of applications for public assistance or financing or restructuring negotiations cannot be completed within the three-week period, the legal regulation is intended to ensure that companies do not have to file for insolvency if assistance can be expected.

The obligation to file for insolvency is suspended until 30 September 2020 and can be extended by decree until 31 March 2021.

The suspension is to be subject to the condition that the reason for the insolvency is based on the effects of the corona epidemic and that there are reasonable prospects of reorganisation based on an application for public assistance or serious financing or reorganisation negotiations by an applicant.

Source:
Federal Ministry of Justice and Consumer Protection (Bundesministerium der Justiz und für Verbraucherschutz)

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