Germany plans reform to avoid bankruptcy wave due to corona

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Germany would relax insolvency rules under proposals set out on Saturday to help avert a wave of bankruptcies in Europe's biggest economy, provided companies hit by the coronavirus crisis have a robust business model.

FILE PHOTO: German Justice Minister Christine Lambrecht addresses a news conference after a virtual meeting with the EU Ministers of Justice in Berlin, Germany July 6, 2020. Kay Nietfeld/Pool via REUTERS/File Photo

19 Sep 2020 07:05PM
(Updated: 19 Sep 2020 07:35PM)

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BERLIN: Germany would relax insolvency rules under proposals set out on Saturday to help avert a wave of bankruptcies in Europe's biggest economy, provided companies hit by the coronavirus crisis have a robust business model.

Keen to avoid bankruptcies and mass layoffs, Chancellor Angela Merkel's government has launched a range of stimulus and relief measures as Germany braces for its biggest slump since World War Two, having shrunk by an unprecedented 9.7per cent in the second quarter.

"Companies that can show creditors a realistic prospect of restructuring should be able to implement their concept outside insolvency proceedings," said Justice Minister Christine Lambrecht in a statement.

Under the draft reform, which would take effect at the start of 2021, the deadline for firms to file for insolvency would be extended to six from three weeks and authorities will apply more relaxed benchmarks when examining over-indebtedness.

The government has already taken steps such as alloRead More – Source