After the Bundestag, the Bundesrat has now also paved the way for legislation to help companies affected by the Corona pandemic through insolvency. This involves an emergency solution that circumvents the previous procedure for initiating insolvency proceedings by postponing the obligation until 30 September 2020. In addition, this initially applies to all companies currently affected by insolvency, which were still solvent at 31.12.2019. Furthermore, COVInsAG contains reliefs for managing directors that limit their personal liability. In addition, COVInsAG also includes exemptions from the spending restrictions of insolvent companies, so that important financial transactions are now allowed contrary to the previous regulations. In this way, the Federal Government is trying to provide rapid assistance to all those companies that have been in difficulties due to the Corona pandemic through no fault of their own. Because it is quite clear that without the exception COVInsAG a very high number of companies would have to file for insolvency in the coming weeks and months.
In addition, COVInsAG contains many other regulations for the protection of debtors, company law and even the Code of Criminal Procedure. As a precautionary measure, provisions are also laid down to extend, if necessary, the periods adopted in the arrangements for the likely duration of the measures to combat the corona pandemic. This lays the foundation stone for legislators to make quick decisions if necessary to offer further assistance.
The “Law for the Temporary Suspension of the Insolvency Filing Obligation and the Limitation of Organ Liability in the event of Insolvency Caused by the CIVID-19 Pandemic” – known as COVInsAG for short – contains a whole bundle of measures with which the Federal Government is trying to contain the acute threat of insolvencies. This is intended to provide the companies concerned with swift, uncomplicated and, above all, effective help, in particular to prevent insolvency. In addition, many other relevant aspects have also been considered by the new COVInsAG. In particular, the emergency measures shall address:
This article does not replace tax or legal advice in an individual case. Facts, current law, jurisdiction, documentation and implementation remain decisive.