Now that the Bundesrat also approved the "Corona" legislative package on Friday, it is official: the obligation to file for insolvency has been suspended (for the time being) until September 30, 2020. The Ministry of Justice can extend these regulations until March 30, 2021.
What does this mean?
Companies in which no natural person has full liability (GmbH, GmbH & Co KG, cooperative, association and AG) are obliged to file for insolvency (within a maximum of three weeks) if they are over-indebted or unable to pay. This obligation does not currently apply if the crisis – i.e. the existence of one of the above-mentioned reasons for insolvency – is due to the coronavirus pandemic. Such a causal connection is assumed if the company was still healthy as of December 31, 2019. On the other hand, the obligation to file for insolvency remains if there is no prospect of eliminating the insolvency. The legislator does not specify when this is the case and over what time horizon this assessment is to be made. Here, it will be necessary to consider the respective individual case and its particularities.
Affected companies are therefore advised to carefully analyze and examine their respective situations and their effects in the near future and to document the results of their assessments, in particular the prognosis for the future. In many cases, confirmation and validation by an external expert will be recommended to increase the legal certainty of the results and to reduce any remaining liability risks.
Supporting regulations:
However, the suspension of the obligation to file for insolvency alone is not enough to protect companies and entrepreneurs. Therefore, the – largely unknown – liability provision of § 64 GmbHG (and identical provisions for the AG, the cooperative and the GmbH & Co KG) has been temporarily suspended. The managing director can make payments despite the crisis, even if the crisis persists.
In addition, the financial assistance granted during the crisis was favored. The subordination of a shareholder loan in the event of insolvency was reversed, so that such loans are privileged if they are repaid by September 30, 2023, and the entrepreneur should not suffer any disadvantages from his subsequent financing from the crisis period, because otherwise such shareholder loans will not be taken into account and repayments already made to the shareholder will have to be reversed. In many cases, this makes it easier to save the company.
Until September 30, 2020, applications by creditors (in particular health insurance companies often file for insolvency) are only admissible if the reason for opening insolvency proceedings existed before March 1, 2020. The creditor must therefore demonstrate that significant arrears already existed and could not be paid.
Nevertheless,
companies cannot afford to be complacent. The protective shield for companies is much smaller than was originally envisaged in the first draft of the Ministry of Justice. All due claims remain due and must be paid. Otherwise, default interest will accrue and the creditor is not prevented from enforcing this in court. The prohibition of termination introduced for tenancy law applies – contrary to the first draft bill – only to rental contracts for rooms and buildings (i.e. not to vehicle rentals and leasing) and not for all contracts in general. Both credit installments to the bank and social security contributions to the health insurance funds are to be paid. In the event of difficulties, the respective creditors should therefore be contacted and a settlement plan submitted.
Entering into new liabilities (e.g. ordering goods) while it is already clear that payment will hardly be possible remains a criminally relevant act of fraud, with the consequence of personal liability for the loss on the part of the person acting. Here, too, liquidity planning can be helpful because it relieves the acting party should things go wrong.
These are only the most important things summarized about the Corona / Corvit-19 / SARS-CoV-2. As is so often the case, the practice is more complex and depends on the individual case. If you have any questions or need support, please feel free to contact us.
The statements represent initial information that was current for the law applicable in Germany at the time of initial publication. The legal situation may have changed since then. Furthermore, the information provided cannot replace individual advice on a specific matter. Please contact us for this purpose.