Many companies ran into financial hardship as a result of the flood disaster. The federal cabinet wants to prevent the fact that they now have to go to the bankruptcy court for the time being.
After the flood disaster, the Federal Cabinet initiated a temporary suspension of the obligation to file for insolvency for companies, especially in western Germany. The Ministry of Justice announced on Wednesday.
“Due to the heavy rain and the floods, companies that have viable and successful business models, through no fault of their own, got into financial hardship,” said Justice Minister Christine Lambrecht (SPD).
In order to help people and companies in the affected regions, extensive financial aid has already been initiated, said Lambrecht. “But we have to prevent companies from having to go to the bankruptcy court only because support services, such as the assistance we have decided, do not reach them on time.”
Therefore, the obligation to file for insolvency for affected companies should be suspended retrospectively from July 10, 2021 to the end of October 2021. This should give companies important time, for example to take advantage of economic aid and to be able to react to the challenges of the severe weather disaster.
The prerequisite for a suspension of the obligation to file for insolvency is that the insolvency or over-indebtedness of companies is based on the effects of the heavy rainfall and the floods in July 2021. According to the ministry, the suspension should only apply as long as companies are conducting “serious financing or restructuring negotiations” and there are justified prospects of restructuring.
The Bundestag has to approve the law. From a technical point of view, the cabinet decided to provide formulation assistance for the coalition factions. This makes a special session of the Bundestag during the summer break more and more likely.
Jane Stock is a technology author, who has written for 24 Hours World. She writes about the latest in technology news and trends, and is always on the lookout for new and innovative ways to improve his audience’s experience.
