Germany: In reaction to the energy crisis - Further relief from the obligation to file for insolvency

In brief

While the financial burdens of the COVID-19 pandemic in the form of higher debt levels have by no means subsided, the German economy is already facing its next challenge with the current energy crisis. In response to the enormous price increases and fluctuations on the energy and raw materials markets, the German Parliament has passed temporary amendments to the restructuring and insolvency laws. The "Act on the Temporary Adaptation of Restructuring and Insolvency Law Provisions to Mitigate the Consequences of the Crisis" (in short: Restructuring and Insolvency Law Crisis Consequences Mitigation Act - "SanInsKG") - which has yet to be promulgated - aims to provide relief for companies that are "in essence healthy" and capable of surviving in the long term, but for which forward-looking liquidity planning is not possible at the moment, or only possible to a limited extent, due to the current price volatility.

In this newsletter, we summarize the particular decisions made by the German Parliament and assess what effects the relief package is likely to have on the restructuring practice.


Overview of the SanInsKG

The SanInsKG directly follows from the Covid-19 insolvency legislation in the form of a renaming of the "COVID-19 Insolvency Suspension Act (COVInsAG)" entered into force on 1 March 2020. The new designation of the law makes it clear that politics want to take a regulatory approach to the current economic "crisis" - initially limited until 31 December 2023. The SanInsKG has its origins in the package of measures adopted by the government/coalition committee on 3 September 2022 to secure an affordable energy supply and strengthen incomes. It comes alongside the primary financial aid still to be implemented (so called "Doppelwumms" by the chancellor). As the third relief package, the SanInsKG is primarily intended to ease the obligation to file for insolvency. This relief is to be achieved through the following measures, which will be discussed in more detail below:

  • Shortening of the period for the continuation forecast in the case of over-indebtedness pursuant to section 19 (2) sentence 1 of the German Insolvency Code ("InsO") from twelve to four months (for more details see 1)
  • Extension of the maximum periods for filing for insolvency in the event of over-indebtedness pursuant to section 15 a (1) sentence 2 InsO from six to eight weeks (for more details, see 2)
  • Shortening of the period for the financial plan in the context of self-admin¬istration proceedings pursuant to section 270 a (1) no. 1 InsO and in the context of a restructuring project pursuant to section 50 (2) no. 2 of the Act on the Stabilisation and Restructuring Framework for Businesses (StaRUG) from six to four months (for more details, see 3)
  • Important: The general suspension of the obligation to file for insolvency that has been discussed in the meantime (as it was once the case during the Corona pandemic) is - for the time being - off the table. The insolvency ground of illiquidity (section 17 InsO) also remains unaffected.

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