Covid-19: Germany takes action against corporate bankruptcy filings

German Chancellor Angela Merkel, here during an interview in Berlin, June 4, 2020. John MACDOUGALL / AFP / POOL

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3 min

Germany wants to relax the rules on corporate insolvency.

The goal is to avoid a wave of bankruptcy filings from companies weakened by the coronavirus crisis.

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The economic recovery plan adopted by Chancellor Angela Merkel in June is already allowing companies in financial difficulty because of the pandemic to delay filing for bankruptcy until the end of the year.

Previously, this deadline fell at the end of September.

The new device goes even further.

It provides that companies that can prove to creditors that they are able to restructure will have six weeks before declaring their insolvency, instead of three currently.

This new device intended to support businesses comes at a time when activity is hit hard in Germany.

With the country's gross domestic product which contracted 9.7% in the second quarter.

On the other hand, partial unemployment introduced in mid-March in order to help companies not to lay off seems to be working.

The number of job seekers in Germany fell to 5.1% in September, from 5.2% in August.

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