Covid-19 coronavirus: Amendment to COVInsAG
04 September 2020
From 1 October 2020 onwards, illiquid companies must once again file for insolvency without undue delay, and no later than within three weeks. In case of doubt, a liquidity status report should be prepared now and, for companies undergoing financial crisis, a rolling 13-week liquidity forecast should be prepared in the interests of legal certainty.
For non-illiquid companies, i.e. companies that are over-indebted but also companies that are neither over-indebted nor illiquid (!), the legislature continues to offer temporary stability during the period of suspension of the obligation to file for insolvency on the grounds of over-indebtedness until the end of 2020:
- Directors are not obliged to issue a positive going-concern prognosis in order to avoid having to file for insolvency on the grounds of over-indebtedness, and payment prohibitions under insolvency law will not apply to them even in a potential situation of over-indebtedness.
- Lenders may grant new loans to companies and may have collateral provided without having to fear liability or avoidance risks. In particular, the requirement to obtain a restructuring opinion generally remains suspended.
- Shareholders may grant shareholder loans without having to fear avoidance or liability risks.
But beware: In addition to the familiar challenges related to mixed financing structures (“new/old money”) owing to the limitation of the various exemptions, it is advisable to prepare not only a rolling liquidity forecast but, where possible, also a restructuring concept serving at least as a “roadmap” through the crisis, because some uncertainties remain as to the exact scope of application of the various exemptions in the run-up to a potential illiquidity situation (= crisis).
From 1 January 2021 – under the current rules – a positive going-concern prognosis will again be important in order to avoid over-indebtedness, and the requirements for restructuring loans will again apply in full. Companies should thus use the time in order to develop at least the basic structures for a conclusive restructuring or refinancing concept.