Chapter 11 focuses on preserving reorganization or going concern value over liquidation value. As a corollary, Chapter 11 assumes that the most efficacious way to achieve that result is to retain management and enable multiple outcomes either through a plan of reorganization, a series of going concern sales and even a liquidating plan. Chapter 11 enables a wide range of proposals to be put into a reorganization plan, including having the company and its management survive the process.

The following article is the translation of an associated podcast, which is available in German here.

In Germany, as in many other countries, a number of laws have been passed in order to respond to the economic challenges in connection with the Covid-19 crisis. This memorandum provides a brief summary and overview focusing on the most relevant changes to the legal landscape.

I. Financial Support

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.

As Covid-19 continues to spread across the world, the likelihood of your organisation being directly impacted by the outbreak (e. g an infected customer, employee etc.) also increases. Each organisation should insure that it has in place a robust organisational resilience plan which addresses all relevant issues.

Temporary suspension of obligation to file for insolvency and of creditor’s right to request opening of insolvency proceedings

On 25 March 2020 the German parliament passed a bill “to mitigate the consequences of the COVID-19 pandemic in civil, bankruptcy and criminal procedure law” (COVID-19 Bill) that aims at protecting companies that experience financial difficulties as a result of the COVID-19 pandemic.

Wenn es eilt, bietet die ZPO Mittel und Wege, schnell ans Ziel zu kommen. Der Eilrechtsschutz ist in der COVID-19-Pandemie daher stark im Fokus. Es stellen sich Fragen wie „, Können die Gerichte helfen, die Lieferkette zu stützen?, Wie lässt sich ein Eilverfahren derzeit praktisch durchführen?, Ist durch ‚Corona‘ jetzt alles dringlich?“. Dieser Beitrag unserer Reihe „Coronavirus & Zivilprozess“ verschafft einen Überblick.

Überblick: Eilrechtsschutz mittels Arrest und einstweiliger Verfügung

As part of the package of measures to mitigate the effects of the corona crisis, the German Bundestag has fast-tracked an act to mitigate the consequences of the COVID-19 pandemic in civil law, insolvency law, and the law on criminal procedure, adopting it into law on 25 March 2020. 

The act contains a civil law moratorium that benefits parties who owe certain forms of contractual performance where the COVID-19 pandemic has forced them into the position that they cannot meet their contractual obligations.

On 27 March 2020, the law for the Mitigation of the Consequences of the COVID-19 Pandemic in Civil, Insolvency and Criminal Proceedings Law was announced in the Federal Law Gazette (BGBl. I 2020, page 569). Among other things, the retroaction under commercial law in case of restructuring measures for the year 2020 was extended from eight to twelve months, although adaptations in the Reorganisation Tax Act (UmwStG) were not made in this context. This may result in complications.

Vorübergehende Aussetzung der Insolvenzantragspflicht und des Rechts des Gläubigers, die Eröffnung eines Insolvenzverfahrens zu beantragen

Am 25. März 2020 hat der Deutsche Bundestag ein Gesetz „zur Abmilderung der Folgen der COVID-19-Pandemie im Zivil-, Insolvenz- und Strafverfahrensrecht (COVID-19 Insolvenzgesetz) beschlossen, das darauf abzielt, Unternehmen zu schützen, die infolge der COVID-19-Pandemie in finanzielle Schwierigkeiten geraten.