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Far-reaching changes in insolvency law including pre-insolvency restructuring proceedings to be implemented as early as January 2021
Against the background of the persisting COVID-19 pandemic, the German Federal Ministry of Justice (BMJV) presented a far-reaching draft bill. With effect from January 1, 2021, a pre-insolvency restructuring procedure is to be introduced to implement the EU Restructuring Directive and a large number of changes are to be made to insolvency law aimed at promoting restructuring opportunities. Among other matters, the draft bill will enable companies that are already insolvent to conduct protective shield proceedings by the end of 2021.
The 247-page draft of the bill on the Further Development of Restructuring and Insolvency Law (SanInsFoG) was sent to the trade associations for comment on Friday, September 18, 2020. Regarding the urgency of the matter, a period of just 14 days was set as the deadline for the response.
Some of the draft provisions deeply interfere with the rights of creditors, who may, for example, be able to maintain their obligation to deliver despite knowledge of their customer’s financial difficulties through a court restructuring order. A critical review of the present draft within the scope of the time available was therefore absolutely necessary. PASCHEN succeeded in bringing together at short notice, six leading associations to develop a joint statement.