The Covid-19 crisis is impacting on all businesses across Germany including the dynamic German start-up scene. In this article we outline some of the more important measures taken by the German government to support start-ups through the crisis. These measures include providing immediate financial support, loan finance, subsidies for short-time work schemes, relaxation of management obligations to file for insolvency, tax relief schemes and the suspension of social security payment obligations.
The huge economic impact of the worldwide COVID-19 pandemic has long since reached the German economy. For many industries, the business climate has deteriorated massively. Stores remain closed, supply chains are affected, customer numbers have significantly dropped and businesses have to impose reduced work hours (Kurzarbeit) or forced leave to reduce costs.
As outlined in our client publication of March 27, 2020 (Update for Borrowers and Lenders in Germany), by a new law effective since March 27, 2020 (the “German Covid-19 Insolvency Law Amendment”), the obligation of the management of a legal person pursuant to section 15a of the German Insolvency Act (“German InsO”) has been suspended until September 30, 2020 if certain conditions are met.
- Main points of interest and preliminary analysis –
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.
Die Bundesregierung möchte den durch die Coronakrise geschädigten Unternehmen und ihren organschaftlichen Vertretern Zeit geben, um die notwendigen Finanzierung und Sanierungsverhandlungen zu führen. Dies ist inzwischen durch das Gesetz zur vorübergehenden Aussetzung der Insolvenzantragspflicht und zur Begrenzung der Organhaftung bei einer durch die COVID-19-Pandemie bedingten Insolvenz geschehen.
The Law to mitigate the consequences of the COVID 19 pandemic in civil, insolvency and criminal procedure law ("Gesetz zur Abmilderung der Folgen der COVID-19-Pandemie im Zivil-, Insolvenz- und Strafverfahrensrecht") was adopted by the German Bundestag on 25 March and approved by the Bundesrat representing the federal states on 27 March 2020. With its draft published by the German Federal government on 23 March 2020, the implementation was probably the fastest legislative procedure of such scope in the history of the Federal Republic.