On 23.03.2020, the Federal Cabinet adopted a draft bill submitted by the Federal Ministry of Justice and Consumer Protection (BMJV) to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal procedure law as a "formulation aid for the coalition parties". This draft can be found here on the BMJV website and contains a comprehensive package of measures.
The suspension of the obligation to file for insolvency is included as Article 1 ("Act on the Temporary Suspension of the Obligation to File for Insolvency and on the Limitation of Directors' and Officers' Liability in the Event of Insolvency Caused by the COVID-19 Pandemic" (COVID-19 Insolvency Suspension Act - COVInsAG)).
Contrary to the BMJV's previous press release dated 16.03.2020 (see our blog post dated 19.03.2020), the content of the draft it has now presented does not follow on from the previous regulations on the occasion of the flood disasters in 2002, 2013 and 2016, but goes significantly beyond the regulations at the time. The central provision reads:
§ 1 Suspension of the obligation to file for insolvency
"The obligation to file for insolvency pursuant to Section 15a of the Insolvency Code and Section 42 (2) of the German Civil Code is suspended until September 30, 2020. This does not apply if the insolvency maturity is not due to the consequences of the spread of the SARS-CoV-2 virus (COVID-19 pandemic) or if there is no prospect of eliminating an existing inability to pay. If the debtor was not insolvent on December 31, 2019, it is assumed that the insolvency maturity is based on the effects of the COVID-19 pandemic and that there are prospects of eliminating an existing insolvency. If the debtor is a natural person, section 290 (1) no. 4 of the Insolvency Code shall apply with the proviso that no refusal of discharge of residual debt can be based on the delay in the opening of insolvency proceedings in the period between March 1, 2020 and September 30, 2020. Sentences 2 and 3 apply accordingly."
In essence, this provides for a generally unconditional temporary suspension of the obligation to file for insolvency (sentence 1) and the fiction of the causality of the COVID-19 pandemic for insolvency maturity occurring at a later date in the event of insolvency that did not yet exist on December 31, 2019 (sentence 3). The suspension should only not apply if the insolvency maturity is not due to the consequences of the COVID-19 pandemic or if there are no prospects of eliminating an insolvency that has otherwise occurred (sentence 2).
In addition, the draft contains a number of supplementary provisions in section 2 ("Consequences of the suspension"), namely with regard to
- the fiction of payments initiated by the managing directors / management board members during the suspension as being compatible with the diligence of a prudent and conscientious manager within the meaning of sections 64 sentence 2 GmbHG, 92 para. 2 sentence 2 AktG, 130a para. 1 sentence 2, 177a sentence 1 HGB, 99 sentence 2 GenG (section 2 para. 1 no. 1),
- the exclusion, limited until September 30, 2023, of creditor disadvantages for the repayment or collateralization of loans granted during the suspension, including in the case of shareholder loans (Section 2 para. 1 no. 2),
- the general exclusion of the immorality of loans granted and collateral provided during the suspension (section 2 para. 1 no. 3),
- the exclusion of the contestability of legal acts provided for in various respects (section 2 para. 1 no. 4 lit. a) to e)).
For companies not required to file for insolvency per se, Section 2 para. 2 provides for a broadly corresponding application.
As far as state credit assistance from KfW or other financing institutions is concerned, the granting, collateralization and repayment of such assistance is protected even further by law in accordance with section 2 para. 3, and even indefinitely with regard to repayment.
It can be assumed that a draft corresponding to this drafting aid will be submitted to the Bundestag in the near future - probably this week - and will be passed there. It remains to be seen whether changes will be made to it during the legislative process, in particular with regard to the exemption provided for in section 1 sentence 2 of the draft for insolvency that has already occurred by 31.12.2019 and its non-avoidability ( Prof. Dr. Stephan Madaus is also critical of this).
We will keep you informed here about further developments.
Update from 25.03.2020:
The corresponding draft bill (BT-Drs. 19/18110) has now been introduced into the Bundestag and will be discussed there in public reading today from 14:40.
Dr. Matthias Waack