The economic shock and disruption caused by the outbreak of the SARS-CoV-2-Virus (COVID-19-pandemic) resulted in unprecedented circumstances for companies and prompted recent emergency rescue measures by the German legislator. In the following, we are highlighting two major legislative measures that will come into force in the next few days.

Legislative changes to mitigate the consequences of the COVID-19-pandemic with respect to specific contract, corporate, insolvency and criminal law matters (the “COVInsAG”)

Last Friday, in response to the outbreak of the coronavirus pandemic (COVID-19), the German government announced various measures described as a big "bazooka" to avert a crisis in the Eurozone's largest economy. The German development bank KfW will play a key role in the context of the announced measures and has been tasked to provide liquidity assistance to German companies hit by the pandemic.

The Tax Cuts and Jobs Act signed into law on December 22, 2017, amended the Internal Revenue Code of 1986 (IRC) and made significant changes to the treatment of individual and corporate taxpayers beginning January 1, 2018. While many understand that the overall corporate tax rate is going down, the specific effects of this tax reform on distressed companies, debtors, creditors, and lenders are still being uncovered. Practical Law asked Patrick M. Cox of Baker McKenzie LLP to discuss his views on the Tax Cuts and Jobs Act (TCJA) and its potential impact on the Chapter 11 process.

This is part of a series of articles discussing restructuring and insolvency related provisions of the Tax Cuts and Jobs Act, which is now expected to become law this week (the “Act”).

Previously we discussed net operating losses (“NOLs”) and cancellation of the debt (“COD”). The provisions on NOLs have generally remained the same (adopting the Senate version of the revisions, but immediately capping the use of NOLs to 80% of taxable income). However, the changes to COD rules we discussed are not part of the current version of the Act.

This is the second part in a series of articles discussing certain restructuring and insolvency related provisions of the Tax Reform. Previously we discussed net operating losses (“NOLs”), and noted that the House and Senate plans are quite similar when it comes to NOLs. That is not the case with the provisions in H.R. 1 that relate to cancellation of the debt (“COD”).

Congress is attempting to pass tax reform legislation and presently the House of Representatives and the Senate have separate proposals under consideration (separately, H.R. 1 and the Senate Plan, respectively, and collectively, “Tax Reform”). The Tax Reform is changing daily, but one thing seems likely and that is that the Tax Reform will change the treatment of net operating losses (“NOLs”). These changes would have the most significant impact to bankruptcy cases filed after December 31, 2017.

Regulatory capital requirements for prudentially supervised financial services companies across Europe are complex and changing rapidly. To keep track of the regulatory framework in the region, we have brought together the essential features of bank regulation in our EMEA Regulatory Capital wall chart.

Introduction

1. Introduction

On 25 August 2010, the German government published a draft of an Act for the Restructuring and Orderly Liquidation of Credit Institutions, for the Establishment of Restructuring Fund for Credit Institutions and for the Extension of the Limitation Period of Corporate Law Management Liability (Restrukturierungsgesetz, the “German Restructuring Act”). It is anticipated that the German Restructuring Act will soon be introduced to the German parliament and be passed quickly.