The German Federal Government is currently working on a Law for the Mitigation of the consequences of the COVID-19 pandemic in the areas of Insolvency, Corporate, Civil and Criminal Procedure Law. Ministry officials are working through the weekend with the goal to get the legislation finalized by both chambers of parliament as early as possible next week.
This legislation is in addition to other government measures being worked on, most importantly emergency relief packages for businesses such as direct grants subsidized lending, tax breaks and capital/equity injections. There will be further legislation as the situation develops to cater for the exceptional situation for economy and people.
The final version of the law may well deviate from the proposal discussed below and the further development in the course of next week will therefore need to be monitored closely.
The proposed legislation covers four areas:
- Suspension of the obligation to file for insolvency, corresponding limitation of the management’s liability and incentives to continue to do business with the affected companies;
- Measures to simplify decisions in corporate law (most notably AGMs), the laws of associations and of cooperatives as well as of homeowner associations (Wohnungseigentum);
- Moratorium on contractual obligations and rent payments to avoid hardships by introduction of amendments of the Introductory Code to the German Civil Code (EGBGB); and
- Trial suspension flexibility in criminal law procedural rules
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