COVID-19 Insolvency Suspension Act

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Basic data
Title: Law on the temporary suspension of the obligation to file for insolvency and the limitation of directors' liability in the event of insolvency caused by the COVID-19 pandemic
Short title: COVID-19 Insolvency Suspension Act
Abbreviation: COVInsAG
Type: Federal law
Scope: Federal Republic of Germany
Legal matter: Bankruptcy law
References : 311-19
Issued on: March 27, 2020
( Federal Law Gazette I p. 569 )
Entry into force on: March 1, 2020 (Art. 6 Para. 1 G of March 27, 2020)
Weblink: Text of the law
Please note the note on the applicable legal version.

The COVID-19 Insolvency Suspension Act is part of the law passed in March 2020 to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal procedure law , with which the economic effects of the COVID-19 pandemic in Germany are to be countered. The aim of the COVInsAG is to enable the continuation of companies that have got into financial difficulties due to the COVID-19 pandemic and would be insolvent without this law . You will be given the time to take government aid to complete and with creditors and investors financing agreements (eg. As loans ) and redevelopment agreements (z. B. haircuts ) to take to overcome their difficulties.

Suspension of the obligation to file for insolvency and the right to file for insolvency

According to Section 15a sentence 1 of the Insolvency Code (InsO), the representative of a legal person (e.g. a GmbH or AG) and, according to Section 42 (2) BGB, the board of an association must file an application to open insolvency proceedings in the event of insolvency or overindebtedness. This obligation is suspended by § 1 COVInsAG until September 30, 2020. The suspension of the obligation to file for insolvency requires that the bankruptcy readiness is based on the effects of the COVID-19 pandemic. In the event of insolvency, it also requires prospects to insist on eliminating the insolvency. The obligation to file for insolvency is only suspended as long as there are actual prospects of eliminating the insolvency. If there are no longer any prospects, an application for insolvency must be filed immediately.

Anyone who invokes the existence of a breach of the duty to submit an application bears the burden of proof.

Section 3 COVInsAG limits the right of creditors to apply for insolvency proceedings to be opened for insolvent or overindebted debtors (so-called third-party applications or third-party applications): In the case of third-party applications made between March 28 and June 28, 2020, the insolvency procedure will only then opened if the reason for insolvency already existed on March 1, 2020.

These regulations apply retrospectively from March 1, 2020.

Relaxation of the payment bans

Managing directors and board members are generally not allowed to make any more payments after the company becomes insolvent or over-indebted ( Section 64 sentence 1 GmbHG or Section 92 (2) sentence 1 AktG). Only payments that are in the interest of the creditors are permitted because they serve to maintain real opportunities for restructuring (the law then speaks of payments that are compatible with the diligence of a prudent businessman). Section 3 COVInsAG relaxes these payment bans to protect the managing directors and board members if, according to Section 1 COVInsAG, the obligation to file for insolvency is suspended (see above). Payments made in the ordinary course of business are then permitted and do not result in liability. This is particularly the case with payments that serve to maintain or resume business operations or to implement a restructuring concept.

Eligibility of renovation loans

In principle, loans may only be granted to companies in need of restructuring - ie to companies threatened with bankruptcy - under strict conditions. In addition, companies in need of restructuring are generally not allowed to repay loans or provide collateral for existing loans. Otherwise, the lender risks tort liability due to the delay in bankruptcy according to § 826 BGB. In addition, the repayment of the loan or the provision of security in the event of bankruptcy can be contested. The consequence of this insolvency challenge is that the lender has to repay the refunded money to the company or is not allowed to claim the security.

Notwithstanding this, Section 2 (1) of the COVInsAG stipulates that restructuring loans - including shareholder loans - granted during the COVID-19 pandemic may be repaid. Payment of reasonable interest is also allowed. However, only new loans are privileged and not the mere extension of existing loans, because the legal purpose of the COVInsAG is to provide companies with new liquidity. Securing shareholder loans is also not privileged. For loans within the framework of state funding programs that are granted by the Kreditanstalt für Wiederaufbau or other institutions on the occasion of the COVID-19 pandemic, these benefits are unlimited in time.

These special regulations also do not apply if the bankruptcy maturity is not based on the COVID-19 pandemic or if there are no prospects of eliminating an existing insolvency.

Further regulations

The COVInsAG also makes it easier to supply the company concerned with liquidity by restricting the possibility of avoiding insolvency vis-à-vis creditors in addition to the above regulations, reducing liability risks for the managing directors and not applying the statutory subordination to new shareholder loans.

criticism

The suspension of the application requirement ensures that companies also operate in the market that would actually be insolvent. This means that suppliers run the risk of continuing to deliver to companies that are no longer solvent. Various economic researchers have pointed out the risks of such a policy. Patrik-Ludwig Hantzsch from Creditreform, for example, expected a postponed bankruptcy wave in autumn 2020 in May 2020 if the suspension lasts until September 30. This could then also trigger subsequent bankruptcies of actually healthy companies. In May 2020, Euler Hermes expected a 10 percent increase in corporate insolvencies in Germany in 2020 compared to the previous year. Despite the strong interventions in the previous insolvency law, the changes brought about by the COVInsAG are welcomed by the literature, as in this way originally healthy companies that got into the Corona crisis without their involvement were given a prospect of survival; this also has a positive effect on the overall economy. However, the innovations of the COVInsAG should no longer apply as absolutely necessary.

See also

literature

  • Martin Obermüller: The examination of the opening requirements in view of the COVID-19 Impact Mitigation Act . In: Journal for the entire insolvency and restructuring law (ZInsO) . No. 21 , May 21, 2020, p. 1037-1046 .
  • Gerrit Hölzle, Annika Schulenberg: The COVInsAG - Comment . In: Journal of Business Law . 2020, p. 633-650 .
  • Christoph Thole: The suspension of the obligation to file for insolvency under the COVID-19 Insolvency Suspension Act and its further consequences . In: Journal of Business Law . 2020, p. 650-660 .
  • Markus Gehrlein : Legal stabilization of companies by adapting insolvency regulations in times of the corona pandemic . In: The company . No. April 14 , 2020, p. 713-724 .

Web links

Individual evidence

  1. Carsten Dierig: "The federal government breeds zombie companies". In: Die Welt from May 14, 2020
  2. ^ Carlo Pöschke: Legislative reactions to the COVID-19 pandemic - Part I: Insolvency and company law. In: Juraexamen.info. May 18, 2020, accessed June 2, 2020 .