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German government extends Corona aid measures

At the end of August, the coalition committee decided to extend some Corona aid measures. The bridging aid for small and medium-sized companies will be granted until the end of the year, as will the suspension of the obligation to file for insolvency. Short-time working allowances will now also be paid for longer.

M&A

by Dr. Ralf Bergjan, ehemals POELLATH, Tobias Jäger, POELLATH, Benjamin Maciejewski, ehemals POELLATH, Nemanja Burgic, POELLATH, Dr. Matthias Meier, POELLATH
4 September 2020
  • Insolvency Law
  • COVID-19
Berlin is gearing up for the Corona Autumn of 2020, and the extension of some economic aid measures is intended to provide relief.
Berlin is gearing up for the Corona Autumn of 2020, and the extension of some economic aid measures is intended to provide relief. Source: Pixabay

State Aids

The coalition committee of the German Federal Government has decided on 25 August 2020 that the interim financial aid program for small and medium-sized enterprises shall be extended until the end of the year. Until now, a period until the end of August applies. For further information regarding the interim financial aid program please refer to this link (in German).

Obligation to file for Insolvency

With the Law to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal proceedings law (COVID-19-Law) dated 27 March 2020, the obligation to file for insolvency has been suspended with effect from 1 March 2020 until 30 September 2020, unless the illiquidity is not due to the effects of the COVID-19 pandemic or there is no prospect of eliminating an illiquidity that has already occurred.

From the resolutions of the coalition dated 25 August 2020 it appears that the suspension of the obligation to file for insolvency is to be extended. As things stand at present, however, it is planned to suspend the obligation to file for insolvency until 31 December 2020 only if the reason for insolvency is over-indebtedness.

There are no plans to extend the suspension if the reason for insolvency is illiquidity. If the adopted law does not deviate from the previous resolutions, insolvent companies will be obliged to file for insolvency in accordance with Section 15a of the German Insolvency Code (InsO) after 30 September 2020.

Short-time Work shall be prolonged

The coalition committee of the German Federal Government has agreed on a prolongation of the maximum period of short-time working compensation from twelve to up to 24 months, at the latest until 31 December 2021. The extension applies to companies that have announced short-time work until 31 December 2020. The amount of short-time working compensation depends on the duration of short-time work.

In addition, the reimbursement of social security contributions by the Federal Employment Agency is to be extended. Until 30 June 2021, a full reimbursement of social security contributions for short-time work shall be applicable for employers. For the period from 1 July 2021 to 31 December 2021, social security contributions will be refunded at half (with the employer’s possibility to increase to 100% in case of further qualifications of the employee concerned). However, the Government’s plans have to pass the legislative process in order to be adopted as law.

All articles with regard to COVID-19 can be found here.

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The author

Dr. Ralf Bergjan

ehemals POELLATH

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The author

Tobias Jäger

POELLATH

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The author

Benjamin Maciejewski

ehemals POELLATH

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Nemanja Burgic

POELLATH

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Dr. Matthias Meier

POELLATH

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