Renewed suspension of the obligation to file for insolvency

Despite the government’s “Corona protection shield”, the Corona crisis caused very severe financial losses for many entrepreneurs, leading to insolvency. As a result, the COVID 19 Pandemic Mitigation Act was introduced back in March, which regulated the suspension of the insolvency filing requirement until 30 September 2020.
The normally applicable period of a maximum of three weeks from the occurrence of insolvency or over-indebtedness pursuant to section 15a of the Insolvency Code (InsO) was thus considerably extended. Within three weeks of the existence of a ground for insolvency, the debtor must examine whether an insolvency petition must be filed. Furthermore, the application must be made in the affirmative. Insolvency exists if the debtor is no longer able to meet the payment obligations due (section 17 InsO). Over-indebtedness is given if the assets no longer cover the existing liabilities and there is a negative prognosis for continuation (§ 19 InsO). Pursuant to section 15 (1), the following persons are entitled to file an application for commencement of proceedings 1 InsO, in addition to the creditors, each representative body, or each personally liable partner, as well as each liquidator. As a rule, a review period of 3 weeks is granted to those subject to the application. However, this is a case-by-case decision.
While many expected a significant wave of insolvencies in autumn 2020 as a result, the federal government acted and partially suspended the insolvency filing requirement again, this time until 31 December 2020. However, the new suspension only applied to the insolvency ground of over-indebtedness, not to that of insolvency. The reason for this is that the chances of permanently averting insolvency are lower for insolvent companies than for those that are merely over-indebted. In this way, the necessary confidence in economic transactions should be maintained.
Currently, the suspension of insolvency is to be extended again until the end of April according to a formulation aid approved by the Federal Cabinet. In this way, the federal government wants to further accommodate the burden on economic life and mitigate the consequences. In particular, this new scheme is intended to provide further assistance to those debtors who are entitled to financial assistance from the Corona assistance programmes that has yet to be paid out. However, these must be applied for by 28.02.2021 and must be suitable for the elimination of insolvency maturity. In exceptional cases, it is not a question of the application for the aid funds, but only of the entitlement to apply. This shall apply in such cases where it is not legally or factually possible for a person concerned to submit an application by 28.02.2021.
In addition, the reason for the insolvency maturity must be the pandemic. The state aid was thus intended to give the respective companies a “chance to survive”.
These new rules are to apply from 01.02.2021. They thus directly follow the previous regulations.
We will be happy to advise you on this topic and keep you up to date.