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Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure DE-2020-13/403 Updated – measures in Germany

Postponing insolvency procedures

Aussetzung Insolvenzantragspflicht

Country Germany , applies nationwide
Time period Temporary, 23 March 2020 – 30 April 2021
Context COVID-19
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Rescue procedures in case of insolvency or adaptation of insolvency regulation
Author Sandra Vogel (IW) and Eurofound
Measure added 09 April 2020 (updated 31 May 2022)

Background information

The Federal Government modified the insolvency law, in order to help business (faced with bankruptcy due to losses incurred by the COVID-19 crisis to stay in the market. This measure is part of the support package to stabilise the German economy and help out firms during the outbreak and its economic consequences. This measure is part of the support package to stabilise the German economy and help out firms during the COVID-19 crisis. The package was adopted by the Federal Government at the end of March 2020 and also includes other measures (such as lowering tax burdens, easing rules for short-time work, facilitating better access to loans, start-up support, income support for solo entrepreneurs).

Content of measure

According to this measure, business threatened by insolvency do not need to file for bankruptcy until 30 September 2020. This measure is open for all kinds of businesses (regardless of their size). Should it be necessary, this temporary measure can be prolonged until 31 March 2021 by means of a decree of the Federal Government. This measure is part of a broader package that also includes changes in tax law, all of them directed at easing tax burdens for companies in times of crisis; and also includes easier access to loans, start-up support or financial help for solo- or micro entrepreneurs, eased up rules for short-time work.

Updates

The following updates to this measure have been made after it came into effect.

14 July 2021

As of July 2021, rules on postponed insolvency procedures were not prolonged.

22 February 2021

In February 2021, the rules on postponing insolvency procedures were prolonged by the Federal Government until 30 April 2021.

07 January 2021

As part of the new aid packages released by the Federal Government in autumn 2020, the October rules on postponing insolvency procedures were prolonged until 31 January 2021.

08 October 2020

On 25 September 2020, the Federal Government modified the insolvency law for a second time. With it the duty to report insolvency proceedings has been suspended until 31 December 2020. However, this only applies to businesses which are heavily indebted.

08 October 2020

There is no information on how many companies and businesses have postponed insolvency procedures. However, the Federal Statistical Office indicates that the number of businesses declaring bankruptcy is 6.2% lower for the first half of 2020 compared to the first half of 2019. In August 2020, there were 38.9% fewer new insolvency proceedings compared to August 2019. This decrease is attributed to the COVID-19 national measure that allows businesses to postpone their insolvency if in crisis. It is unclear how many businesses will have to file for bankruptcies once Federal COVID-19 measures are no longer in place and insolvency procedures can no longer be postponed.

Use of measure

On 18 December 2020, the Federal Statistical Office reported that 12,491 companies filed for insolvency between January and September 2020. Their share dropped by 13.1% in comparison to the same period in the previous year. The Federal Statistical Office explained the decline in numbers with the new rules on postponing insolvency procedures.

As reported by the Federal Statistical Office on 10 September 2021, 7,408 companies filed for insolvency in the first half of 2021. This is 17.7% less than in the previous year. However, expected claims by creditors from applied insolvencies are estimated at €31.8 billion for the first half of 2021, which is almost double compared to the same timeframe of the previous year (€16.7 billion). This rise is contributed to the fact, that more economic important companies filed for insolvency in the first half of 2021 compared to the same period in 2020. Furthermore the low number in insolvency proceedings is related to federal aid programmes and the restart of the regular obligation to file for insolvency in May 2021.

Target groups

Workers Businesses Citizens
Does not apply to workers Applies to all businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Company / Companies
Local / regional government
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Consulted Consulted
Form Direct consultation outside a formal body Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

  • Unknown
  • Main level of involvement: Peak or cross-sectoral level

Involvement

German social partners are usually consulted by the Federal Government on broader measures, though no formal tripartite social dialogue structure exists in Germany at the federal level.

Views and reactions

The Confederation of German Employers' Association (BDA) and the German Trade Union Confederation (DGB) jointly welcomed the crisis package adopted by the Federal Government in spring 2020.

Sources

  • 13 March 2020: DGB and BDA: The social partners share responsibility in the corona crisis over differencesSocial partners neglect differences (DGB und BDA: Die Sozialpartner stellen gemeinsame Verantwortung in der Coronakrise über Differenzen) (www.dgb.de)
  • 23 March 2020: Die wirtschaftliche Existenz in der Coronakrise sicher (www.bmjv.de)
  • 27 March 2020: Gesetz zur Abmilderung der Folgen der COVID-19-Pandemie im Zivil-, Insolvenz- und Strafverfahrensrecht (www.bmjv.de)
  • 08 September 2020: Postponing insolvency procedures prologned (www.bmjv.de)
  • 10 September 2020: Postponed insolvency procedures lead to lower bankruptcy numbers (www.destatis.de)
  • 14 December 2020: Insolvency postponing prologned (www.haufe.de)
  • 18 December 2020: Insolvency openings first three quarters 2020 (www.destatis.de)
  • 22 February 2021: Press release insolvency procedure (www.bundesregierung.de)
  • 10 September 2021: Fewer bankruptcy cases in the first half of 2021 (www.destatis.de)

Citation

Eurofound (2020), Postponing insolvency procedures, measure DE-2020-13/403 (measures in Germany), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/DE-2020-13_403.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.