Avoiding insolvency - a guide for business managers in a crisis.
Short-time working allowance, tax liquidity support, financial assistance - the federal government or the EU not only provides money for entrepreneurs in need. An overall concept should prevent that actually healthy companies have to file for insolvency. Five points are particularly important here!
01// Money from the Economic Stabilization Fund, KfW loans, tax deferrals or government guarantees reduce acute liquidity bottlenecks.
Application forms and requirements can be found at: kfw.de/corona
02// The obligation to file for insolvency is eased
Managers of certain legal forms (in particular GmbH, AG, GmbH & Co KG) must file an application for insolvency within three weeks at the latest from the occurrence of the inability to pay or over-indebtedness (§15a InsO). The three-week period begins with the occurrence of the objective insolvency or over-indebtedness - at any rate if the manager could have recognized the insolvency or over-indebtedness with due care.
The obligation to file for insolvency according to the known, old criteria is suspended by the COVID-19 Insolvency Suspension Act (COVInsAG) until 30 September 2020, if (1) the inability to pay is due to the consequences of the COVID-19 pandemic and (2) there are prospects of eliminating the inability to pay by 30 September 2020. The legislator has provided the managers with a generous presumption rule for this purpose. If the company was insolvent on December 31, 2019, these two conditions are presumed to apply for suspension of the obligation to file for insolvency. Over-indebtedness as the second reason for insolvency is temporarily suspended in full until September 30, 2020.
This ensures that the state liquidity aid actually reaches the companies without managers violating their obligations to file for insolvency because the processing of applications for short-time work benefits, money from the Economic Stabilisation Fund, federal guarantees and the KfW Entrepreneur Loan takes a certain amount of time. . The same applies to government measures which relieve the liabilities side of the liquidity status, such as tax deferrals or the reduction of tax advance payments ", explains Dr. Christian Brünkmans, lawyer and partner at Flick Gocke Schaumburg in Bonn.
The idea: Companies with a stable business model whose insolvency is caused by the COVID 19 pandemic should not have to file for insolvency.
Companies that are already insolvent or will become insolvent in the foreseeable future should as a precautionary measure check and document the causality of the effects of the COVID 19 pandemic, such as a drop in sales due to business closures, loss of production, quarantine measures, etc. In addition, a valid liquidity plan must be prepared which shows that solvency can be restored by September 30, 2020 - if necessary taking into account government aid measures.
03// The liability of managers for payments in the event of insolvency maturity during the suspension period is limited.
"Normally, managers are personally liable for payments they make even though the company is ready for insolvency - i.e. is insolvent or overindebted," explains Dr. Matthias Merkelbach, lawyer and partner at Flick Gocke Schaumburg in Bonn. As a "rule of thumb", an inability to pay always exists when the gap between liquid assets and due liabilities is greater than ten percent. Exception to personal liability: Payment corresponds to the diligence of a prudent business manager.
If the obligation to file for insolvency is suspended, payments made in the ordinary course of business are considered compatible with the diligence of a prudent and conscientious manager and do not trigger any liability of the manager as a result (§2 para. 1 no. 1 COVInsAG).
Tip from the lawyer: Nevertheless, the manager should always check whether the payments are necessary. In case of doubt "drive on sight".
04// Suspension of subordination for shareholder loans granted during the suspension period.
The problem: "
If shareholders give loans to improve liquidity, they are subordinated in the event of insolvency. That is why many shareholders shy away from granting the company a new loan in critical phases", Dr. Christian Brünkmans knows.
The solution: The
legislator has resolved three major revaluations of shareholder loans by the COVInsAG
- If shareholder loans are granted during the suspension period (currently March 1 to September 30, 2020) and repaid by September 30, 2023, this is not contestable under insolvency law.
- If insolvency proceedings are applied for up to 30 September 2023, shareholder loans granted during the suspension period will not be treated as subordinated in accordance with section 39 (1) no. 5 InsO, but will be regarded as simple insolvency claims (section 38 InsO).
But: It is questionable whether this privilege also applies to shareholder loans granted during the suspension period for companies not ready for insolvency in accordance with §2 para. 2 COVInsAG. "It is unclear whether the precondition is at least economic difficulties," says Christian Brünkmans.
05// Securing liquidity through short-term right of refusal to pay
Continuing obligations - such as insurance contracts or energy supply contracts - represent monthly expenses that place a particular burden on companies in the corona crisis.
For consumers and small businesses, a right to refuse performance has been introduced for contracts concluded before 8 March 2020. if the business can credibly demonstrate that it is not possible to provide the service without endangering the economic basis of its business operations and that this endangerment is due to the COVID 19 pandemic, it can refuse performance from 1 April 2020 to 30 June 2020.
In addition, a so-called termination ban has been introduced for all companies - not only for consumers and small businesses - with regard to rents and leases. If tenants or leaseholders refuse to pay in the period from 1 April 2020 to 30 June 2020, landlords and lessors may not terminate the contract if the non-performance is due to the effects of the COVID 19 pandemic and this connection can be credibly demonstrated.
Termination rights of the landlord for other reasons remain unaffected.