On 16 March 2020, the German Federal Ministry of Justice and Consumer Protection (BMJV) announced that it would promptly create a legal regulation according to which companies that are experiencing economic difficulties as a result of the corona crisis may, under certain conditions, refrain from immediately filing for insolvency. The announcement [in German] can be found here.
The currently applicable legal situation pursuant to Section 15a of the German Insolvency Statute (Insolvenzordnung, InsO) provides for corporations and partnerships in which no natural person is fully liable to be obliged to file a request for the opening of insolvency proceedings for the assets of the company at the latest three weeks after the commencement of insolvency or overindebtedness. If they fail to do so, the representatives of the company's executive bodies are threatened with criminal liability for delaying insolvency and far-reaching civil liability.
Now, due to the current corona crisis, companies and entrepreneurs are facing unexpected challenges. Due to the official restrictions on passenger and freight transport, many economic players are losing a considerable amount of revenue, while overhead costs remain unchanged. It is easy to understand that only very few companies have liquidity reserves that make it possible to survive such a situation for a long time. In order not to provoke a wave of insolvencies, the BMJV has announced the step, which is to be welcomed in principle, of suspending the obligation to file for insolvency - initially limited until 30 September 2020 - under the following conditions:
Similar measures have already been taken in the past, most recently in connection with the flood disaster in spring 2016.
Due to the associated risks of criminal and civil liability (in contract or tort) for the executive bodies of companies concerned, it is urgently recommended that the existence of the prerequisites for making use of the exemption from the obligation to file for insolvency be carefully documented. But even if these prerequisites are understandable from a legal policy perspective, the announcement of the BMJV raises many questions:
It is true that the BMJV's initiative has the declared aim of avoiding insolvencies. If, however, insolvency proceedings are nevertheless opened for the assets of a company which initially did not file for insolvency due to the change in the law - for example, due to a subsequent creditor application or an own application after the expiry of the suspension of the duty to file for insolvency - the following risk exists: It is recognised in case law that there is a presumption (in favour of the insolvency administrator as the creditor of the liability claim) that a reason for insolvency (inability to pay or over-indebtedness) which has once occurred will persist. If the sued managing director or board of directors refers to an interim regaining of solvency or the interim cessation of over-indebtedness of the company, the burden of proof rests with him/it. Experience has shown that proof, in turn, can only be provided by meticulous documentation. As a result, this means that the managing director who does not file for insolvency in reliance on the new regulation may later be liable for all payments made since the company became insolvent - although he was not obliged to file for insolvency at that time. The legislator is therefore called upon to extend the new regulation to include liability events linked to material insolvency.