Covid – 19 hits the economy hard. Shops are closed, production is suspended in many companies. The concerns of entrepreneurs are great, many are afraid of bankruptcy in the corona crisis. The federal government wants to prevent the worst with loans and grants.
But even if Federal Minister of Economics Peter Altmaier (CDU) promised quick help on Wednesday, it may take time for the money to reach the companies. Many companies would have to file for bankruptcy because they are no longer solvent – even though rescue is approaching.
The Federal Government wants to prevent this – as part of its rescue package. Federal Minister of Justice Christine Lambrecht proposed to relax the filing requirements for bankruptcy and thus give the companies a respite. “We want to prevent companies from having to file for bankruptcy only because the aid decided by the federal government does not reach them,” emphasizes the SPD politician.
What is it about?
Clause 15 a of the Insolvency Code (InsO) obliges the managing directors of a GmbH or the directors of a stock corporation to file for bankruptcy if the company is insolvent or over-indebted. They have to do this within a period of three weeks, otherwise they can be punished for delaying bankruptcy. You then face a fine or imprisonment of up to three years. In addition, after a conviction for delaying bankruptcy, you may no longer work for five years as an authorized representative of a legal person.
What is the problem?
In the Covid – 19 crisis is the regular three-week period too short, says Lambrecht. There was no guarantee that government grants would arrive on time within the company. The short application deadline could therefore leave the state bailout program in vain.
What should change?
To avoid companies filing for bankruptcy only for this reason because their applications for government grants cannot be processed within three weeks, the insolvency application will be temporarily suspended. Creditors should also not be allowed to file for bankruptcy.
This only applies if the bankruptcy is not based on the effects of the Covid – 19 pandemic or there is no prospect of it the elimination of an existing insolvency.
But there is also a concession here: In favor of the ailing companies, it is legally presumed that the corona virus is the reason for the insolvency if a company on 31 . December 2019 was still solvent. The regulation initially applies until 30. September, but can be until 31. March 2021 to be extended.
To whom does the regulation apply?
The obligation to file for insolvency applies to legal entities or “companies without Legal personality ”, for example joint stock companies, GmbHs and GmbHs & Co KGs. Partnerships such as OHGs, KGs or GbR are not affected, nor are individual merchants. Sole traders, such as the florist around the corner, can go bankrupt, but do not have to file for bankruptcy. However, if you later try to get a debt relief, it would be good to have filed for bankruptcy, says Berlin insolvency law expert and lawyer Volker Beissenhirtz, who advises and restructures companies.
What does that bring Reform?
It gives companies time and is accompanied by state aid. A similar regulation had already existed after the flood disasters 2002, 2013 and 2016. However, of the 3.5 million companies that exist in Germany, 2.1 million are sole proprietors and just barely 740. 000 corporations.
Who checks whether the requirements are met?
This happens in the companies themselves. The Federal Ministry of Justice has an overview of the measures for injured parties on the website Company compiled. The federal states have also published their own information on the support measures. In addition, the Chamber of Commerce and Industry, the Chamber of Crafts and the tax consultants and lawyers who specialize in restructuring advice will be able to help, according to the Association of German Insolvency Administrators.
Do you have to apply for government aid?
If companies have the financial strength to survive the crisis from their own resources, then they do not have to apply for state aid, says the Association of Insolvency Administrators. In many cases, if they are too weak, the acting persons who have to fulfill their duty of care will have no choice but to make such requests for help as soon as possible. In fact, says lawyer Beissenhirtz, companies that are stricken and do not file for bankruptcy are obliged to apply for government aid.
What happens if you are wrong?
If a company had to apply for bankruptcy, it is theoretically conceivable that managing directors or board members would have to answer later for delaying the bankruptcy. However, Beissenhirtz does not believe that such things will really be pursued later. “The crisis is too big for that,” he says.
What about Maredo and Vapiano?
Vapiano has so far not filed for bankruptcy informed that the company is insolvent. However, companies that were already in an economic or strategic imbalance before the corona crisis have to critically question whether they can receive state aid, warns the Association of Bankruptcy Administrators. “Because the intention of the legislature is precisely that only the effects of the current crisis should be mitigated, but not the consequences of the wrong business developments of the past.”
The steak house chain Maredo actually has bankruptcy requested. The advantage: the employment agency continues to pay salaries for three months.