Many businesses continue to experience unprecedented pressure on their cash flow given, among other things, the continued fall-out from the global pandemic, the war in Ukraine, the cost of living crisis, rising interest rates, the end of cheap debt and the expected global downturn.
To mitigate their exposure to personal liability, it's important that directors of insolvent companies or companies in the zone of insolvency comply with their duties to act in the best interests of the company as a whole. This includes the interests of creditors as a whole.
A comprehensive change to German insolvency and restructuring law has become effective starting 1 January 2021. The change allows that a company's reorganization is possible without insolvency and includes the majority decision of its creditors.
Background
The Cayman Government has restricted entry to the Island since mid-March and is currently operating a curfew system day and night for residents other than essential workers, with the exception of exercise or essential trips such as to the supermarket or for medical reasons.
Both the German federal government and various German federal states are pushing ahead with packages of measures to mitigate the as-yet-unforeseeable economic consequences of the COVID-19 pandemic.
Overview
In order to mitigate the economic consequences of the COVID-19 pandemic, the legislator passed the COVID-19 Insolvency Suspension Act (COVInsAG; the “Act”), which came into force on 27 March with retroactive effect from 1 March 2020.