Validity of the obligation to file for insolvency in the event of insolvency due to inability to pay despite the COVID-19 Insolvency Suspension Act from October 1, 2020

Important information for directors, managers and other representatives of executive bodies

from
Eckhard Finke
Lawyer
Specialist in insolvency and reorganization law
Steuerberater

Give me a call: 0261 - 404 99 761
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Give me a call: 0261 - 404 99 95
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The obligation to file for insolvency in the event of insolvency (Section 17 InsO) will be reinstated on October 1, 2020 - despite the fact that the COVID-19 Insolvency Suspension Act (COVInsAG) will continue to apply in principle until December 31, 2020. Therefore, if a legal entity (e.g. GmbH, AG) is insolvent as of October 1, 2020 (i.e. the debtor is unable to pay 90 percent of its total due liabilities within three weeks, BGH, judgment of December 19, 2017 – II ZR 88/1) should be, this means for the managing directors, board members and other managing body representatives that they are obliged to file for insolvency.

With the revival of the obligation to file for insolvency, the personal liability under civil and criminal law of the representative bodies in the event of a delayed filing for insolvency is also revived.

In view of this, the representative bodies of companies with current liquidity problems should check at short notice whether an inability to pay could become a reality after October 1. A possibly required insolvency application would have to be filed without undue delay, but no later than three weeks after the onset of insolvency. But the dangerous liability for payments of the managing director (e.g. § 64 GmbHG) already applies from the first day of the established insolvency maturity. Therefore, only very limited payments are permitted in the remaining three-week period.

For the reason of insolvency of over-indebtedness (section 19 InsO), the obligation to file for insolvency remains suspended until December 31, 2020, provided that the coronavirus pandemic is the cause of the over-indebtedness. This may seem contradictory at first glance, but it is not. The (liquid) companies that are now up and running again should not be forced into filing for insolvency by the balance sheet deficits that still exist from the crisis. However, these companies must have overcome their inability to pay in order to continue to be protected from the disadvantages of the coronavirus.

We will be happy to assist you with any questions you may have in connection with a possible obligation to file for insolvency.

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.