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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.

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.

Consider this situation: a dispute has arisen between two parties in relation to an agreement which is subject to an arbitration clause. Separately, a winding up application has been made against one of the parties to the arbitration in the jurisdiction in which it is incorporated. An arbitral award is obtained against the potentially insolvent company. That company has assets in Hong Kong, against which the creditor is now seeking to enforce their rights.