25.03.2020

Luther-Corona-Support Special Newsletter Finance

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Background

The exceptional situation caused by the corona virus can have immediate impacts on existing financing agreements. We therefore strongly recommend to review existing financing agreements with regard to reporting requirements, effects on financial ratios and events of default, including MAC clauses, in order to avoid the occurrence of an event of default and to ensure sufficient response time in case an event of default should occur and to prevent so-called drawstops.

The following links provide practical assistance in relation to the recommended review of existing financing agreements on the one hand, but also offer an overview of currently existing government aid programmes and corona related financial aids and provide practical assistance in preparing the documents required for an application for a KfW loan by means of editable checklists. The checklists can be downloaded and edited directly by the applicants themselves.

In addition, the recommended review of the financing structure may also result in further considerations. These include, for example, ways to improve corporate operational financing by adjusting payment terms or revising the company's working capital base, or to use the newly occurring flexibilities to strengthen the equity base. In individual cases, a debt-equity swap may also be considered.

 

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