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Insolvency Suspension Act extended until April 30, 2021
The COVID19-Insolvency Suspension Act (COVInsAG) to mitigate the consequences of the COVID-19 pandemic in civil, insolvency and criminal procedural law, is entering into overtime. Having already been extended twice, the regulations, which were initially set to expire on September 30, 2020, have now been extended again until April 30 2021.
For the period of the first extension until December 31, 2020, the regulation was limited to cases in which over-indebtedness was the only reason for insolvency. Due to a special provision in the SanInsFoG, an extension has been made for cases based on delayed processing of applications and aid payments. The Bundestag passed a last-minute, further extension of this regulation at the end of last week until April 30, 2021. The corresponding amendments to the COVInsAG will come into force retroactively to apply from February 1, 2021 after promulgation.
The insolvency filing obligation of debtors entitled to financial assistance from the Corona assistance programs is further suspended if they file a corresponding application by February 28, 2021, and there are prospects of rescue. Importantly for creditors who have a business relationship with affected companies, the avoidance protection provided under COVInsAG only applies if the crisis is pandemic in nature and there is a real prospect of rescue.
Detailed information on COVInsAG can be found here.