Requirement to file for insolvency suspended

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Floods Requirement to file for insolvency suspended

The flood disaster has had a severe impact on numerous businesses. The requirement to file for insolvency is to be suspended to give those affected more time to sort out their finances.

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The Federal Government intends to suspend the requirement to file for insolvency for businesses affected by the flood disaster in the west of Germany. The planned regulation is aimed at helping companies that are facing financial difficulties as a result of the floods. Damage or business interruptions can lead to the threat of excessive debt or even insolvency.

The objective of the regulation is to give those who have suffered damage time to conduct the necessary negotiations for financing or renovation. Possible insolvency can be averted by public aid, compensation or insurance benefits, deferment of interest and principal payments or in other ways. The suspension of the requirement to file for insolvency will apply retroactively from 10 July to 31 October 2021.

In a statement, Federal Minister of Justice Christine Lambrecht stressed the advantage of the proposed legislation being retroactive. “All those affected can depend on this being legally binding, regardless of when the Bundestag adopts the law.” This was very important, the Minister said. “In such a situation, nobody should have the added anxiety of legal uncertainties.”