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COVID-19-related suspension of the obligation to file for insolvency in parts ended

Managers of companies that were either already insolvent at the end of September 2020 or become insolvent after that date – whether as a result of the COVID-19 pandemic or for other reasons – are again obliged to file for insolvency without delay as of October 1, 2020.

This was decided by the German Bundestag with the law announced on September 25, 2020, amending the law that came into force in March 2020 to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal procedure law (COVID-19 Insolvency Suspension Act).

According to this law, the obligations to file for insolvency and the payment prohibitions for the managers of insolvent companies, which were initially suspended until September 30, 2020, were extended until December 31, 2020 only for those companies that are exclusively over-indebted but (still) solvent as a result of the COVID-19 pandemic.

Since October 1, 2020, the legal payment prohibitions for the managers of insolvent companies and the liability consequences in case of a breach are fully applicable again.

Payments made by an insolvent company to contractual partners, such as landlords, suppliers or utility companies, after September 30, 2020 can again be contested by the insolvency administrator without restriction in accordance with the provisions of the Insolvency Code in the event of subsequent insolvency. The prohibition of rescission regulated in the COVID-19 Insolvency Suspension Act for payments made to contractual partners in accordance with the contract in the period from March 1, 2020 to September 30, 2020 by a company that has become insolvent as a result of the COVID-19 pandemic as well as for payment facilities granted to this company in the aforementioned period is not affected by this.

Already at the end of June 2020, the possibility of creditors of insolvent companies to enforce insolvency proceedings by filing for insolvency expired, which was limited by the COVID-19 Insolvency Suspension Act.