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SanInsKG: new special rules for crisis-related insolvency law remain under the radar
COVInsAG (COVID-19 Insolvency Suspension Act) is now called SanInsKG (Restructuring and Insolvency Law Crisis Mitigation Act)
With the Coronavirus crisis having now been overcome, it has been almost seamlessly replaced by an energy crisis thanks to Putin’s Russia. Against the backdrop of the ongoing crisis, the legislature has decided – largely unnoticed – on new temporary amendments to insolvency law with effect from 9/11/2022. Under the new name of the Restructuring and Insolvency Law Crisis Mitigation Act, SanInsKG, the regulations designed as an amendment to the COVInsAG created during the pandemic will make temporary amendments to restructuring and insolvency law and will remain in effect until 31/12/2023.
The focus is on shortening the forecasting period in the context of the insolvency law definition of over-indebtedness from twelve to four months and the (liquidity) planning period when filing for self-administration in accordance with Section 270a InsO (Insolvency Code) or alternatively when creating the financial plan as part of the StaRUG (Corporate Stabilisation and Restructuring Act) procedure likewise from 6 to 4 months.
Unlike in the now amended version of the former COVInsAG, a causal link between the “use” of relief and the impact of the crisis is no longer required, rather, an all-purpose weapon has been created which addresses supply chain problems and skills shortages as well as problems caused by general inflation or increased energy prices.
Obligation to file for insolvency not suspended
In contrast to the crisis triggered by the pandemic, in this case the legislature has left the obligation imposed on legal representatives of a legal entity to file for insolvency within 21 days after identifying its own insolvency. The only more generous feature for the period in which the new special rules apply is the obligation to file for insolvency in the event of (isolated) over-indebtedness. Here, the management team now has an 8-week instead of a 6-week” reflection period”, and need only focus on a period of 4 months in the continuance prognosis, instead of attempting to examine the glass ball to see 12 months into the future in these uncertain times. Corresponding provisions apply to the financial plan to be drawn up in accordance with Section 50 StaRUG.
Significance of the new special rules under insolvency law in practice
While the significance of the amendments surrounding the filing obligation for (isolated) over-indebtedness is likely to be more academic, the noticeable reduction in the conditions for initiating self-administered insolvency proceedings has considerable potential to massively reshape the insolvency law map. As affected creditors are generally able to draw liquidity for 3 months as early as the point at which they are entitled to insolvency compensation payments by the employment agency (Bundesanstalt für Arbeit) for this period, the reduction of the financial planning requirements from a total of 6 to 4 months should result in self-administration procedures being available as an option for almost every insolvency applicant during the temporary amendment. Given the significantly better acceptance of such procedures in the perception of business partners and the opportunities for the company, and thus its own economic existence beyond the crisis, to be saved, it is hard to imagine this not having an effect on the percentage of self-administration procedures across all insolvencies.
It is therefore high time for creditors to refresh their knowledge on dealing with debtors in self-administration. PASCHEN regularly offers seminars on this topic.