Obligation to file suspended: Flood-damaged companies do not have to file for bankruptcy

After the flood disaster, the federal government wants to prevent a wave of corporate bankruptcies, especially in western Germany.

Actually healthy companies that got into financial hardship through no fault of their own should temporarily not have to file for bankruptcy.

The cabinet launched a corresponding law on Wednesday.

Justice Minister Christine Lambrecht (SPD) spoke of a "very important step".

The Bundestag still has to agree.

From one moment to the next, companies got into great economic hardship, said Lambrecht in Berlin.

“Businesses, vehicles and equipment have been destroyed or badly damaged.” In many places, going on with the business or operations is out of the question because reconstruction costs strength and a lot of money.

Extensive financial aid has already been initiated, said Lambrecht.

"But we have to prevent companies from having to go to the bankruptcy court only because support services such as the assistance we have decided on do not reach them on time."

Only if there is a reasonable prospect of renovation

Therefore, the obligation to file for insolvency for affected companies is now to be suspended retrospectively from July 10, 2021 to the end of October 2021.

This is intended to give companies important time, for example to take advantage of economic aid.

The regulation can be extended by the Ministry of Justice until the end of March 2022.

The prerequisite for a suspension of the obligation to file for insolvency is that the insolvency or over-indebtedness of companies is based on the effects of the heavy rainfall and the floods in July 2021.

According to the ministry, the suspension should only apply as long as companies are conducting "serious financing or restructuring negotiations" and there are justified prospects of restructuring as a result.

The Bundestag has to approve the law.

From a technical point of view, the cabinet decided to provide formulation assistance for the coalition factions.

This makes a special session of the Bundestag during the summer break more and more likely.

"The total damage is certainly in the billions"

The President of the German Chamber of Commerce and Industry, Peter Adrian, recently said that it is currently difficult to give an exact amount of damage to companies in the disaster areas: “What can be said: There are thousands of companies in all of them Orders of magnitude directly or indirectly affected by damage to the infrastructure.

The total damage is certainly in the billions. "

Basically, companies that are insolvent must file for insolvency within three weeks - companies that are over-indebted after six weeks at the latest.

This is intended to protect contractual partners who could otherwise be affected.

Even in the Corona crisis, the obligation to file for insolvency was suspended for burdened companies in order to prevent the bankruptcy of actually healthy companies.

After the flood disaster, the federal government had already decided to provide millions in emergency aid from the federal states.

In addition, the federal and state governments are advising on a reconstruction fund worth billions.

The prime ministers of the federal states want to discuss this with the federal government in the coming week.