In light of the growing pandemic of COVID-19 the German government has decided on a number of unprecedented restrictions for all areas of private and business life which were unimaginable just a few weeks ago. As a result, many production facilities and businesses had to shut down. While the consequences for many companies are already dramatic, the full impact on the economy is still unpredictable as it is unclear how long the current restrictions will subsist.
Does the owner bear the risk in case of bankruptcy?
Due to the tense situation in the hotel industry, various lessees are currently approaching their lessors asking for deferral or abatement of rent payments for the period ahead. There are many suggestions for possible compromises - but the insolvency law situation must always be taken into account in order not to create any risks for tenants or lessors. The comments in this article apply equally to hotel usufructuary leases.
Currently discussed compromises
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”)
On March 25, 2020, the German Bundestag passed the “Act on Mitigation of the Consequences of the COVID-19 Pandemic in Civil, Insolvency and Criminal Proceedings” (“Act”) as part of the so-called “Corona Package.” The Act passed the German Federal States’ Assembly (“Bundesrat”) in a special session on March 27, 2020, and came into force on the same day.
Die Internationale Handelskammer (International Chamber of Commerce, ICC) hat die von ihr empfohlenen Vertragsklauseln zu höherer Gewalt (force majeure) und unvorhergesehenen Leistungserschwernissen (hardship) im März aktualisiert. In Zeiten der Corona-Krise rücken solche, in der Vergangenheit nur selten relevante Klauseln in den Blickpunkt und es ist sinnvoll, eigene Verträge darauf durchzusehen, ob diese insofern für die Zukunft optimiert werden können.
The federal government intends to offer companies that are negatively impacted by the corona crisis and their corporate representatives time to conduct the necessary financing and restructuring negotiations. This has now been effected by the Act on the Temporary Suspension of the Obligation to File for Insolvency and to Limit the Liability of Corporate Bodies in the event of insolvencies caused by the COVID-19 pandemic.
In the following, we provide an overview of government assistance that has already been implemented or is planned to mitigate the effects of COVID-19. The KfW Special Program is available as of March 23, 2020 and applications can be submitted. Please be advised that changes may occur at any time.
We are happy to assist you as you move forward and design a targeted and tailor-made reaction to the current challenges.
Gesetz zur Abmilderung der Folgen der COVID-19 Pandemie
Our lives have changed completely in a few days due to COVID-19 and the world’s response to it. Governments react with a multitude of regulations, which have a considerable influence on the economy especially for the Retail & Consumer sector. This affects very different areas of law. Our sector approach consists, among other things, of showing you the legal consequences in the most diverse legal areas and our contact persons for this.
Handlungsbedarf und Handlungsoptionen