Federal Ministry of Justice and Consumer Protection (BMJV) suspend obligations to file for insolvency
Last Week, German Federal Government has put forward a package of measures to prevent insolvencies and dismissals due to the New Coronavirus, including the creation of a short-term work allowance, the expansion of existing credit programs and tax deferral.
This time, it took a new measure, which determined that companies with financial difficulties due to COVID-19, will have more time before being forced to declare insolvency.
According to the German Insolvency Code (Insolvenzordnung), the regular period for this declaration is three weeks. However, organizational and administrative reasons, it is not possible to guarantee aid to companies during this period.
So, Justice Minister Christine Lambrecht said in a statement: “We want to avoid companies having to declare insolvency because government aid does not arrive in time”.
In order to mitigate the negative effects of Coronavirus, the obligations to file for insolvency will be suspended until 30th of September of 2020, and may be extended until 31st of March of 2021. These measures only apply to companies whose insolvency is due the effects of the serious public health situation we are experiencing and also those where exist reasonable possibilities for restructuring.
The Federal Ministry of Justice is drafting corresponding legislation, similar to others that emerged in 2002, 2013 and 2016 due to the disasters caused by the floods.
