Germany to Ease Bankruptcy Rules to Help Virus-Hit Companies

(Bloomberg) --

Germany plans to ease bankruptcy rules to give companies hit by the coronavirus more time to secure financial aid.

The Federal Ministry of Justice is preparing legislation to suspend a rule that forces companies to arrange help or file for insolvency within three weeks of getting into difficulties. The waiver, previously introduced to help businesses hurt by severe flood damage, will be restricted to companies affected by the outbreak that are eligible for government aid or are securing other forms of refinancing, the ministry said in a statement Monday.

“We want to avoid situations where businesses are forced to file for insolvency because aid from the federal government fails to reach them in time,” Justice Minister Christine Lambrecht said. “With this step we’re helping to mitigate against the effects of the outbreak on the economy.”

The government said last week it would do whatever was necessary to ensure that companies don’t go bankrupt as a result of the health crisis. German state bank KfW can lend up to 550 billion euros ($614 billion) to companies to ensure they survive the pandemic and shield their workers from its impact, Economy Minister Peter Altmaier said.

The suspension announced Monday will apply until the end of September and the ministry will have the option of extending it until March 31, 2021.

To contact the reporter on this story: Karin Matussek in Berlin at kmatussek@bloomberg.net

To contact the editors responsible for this story: Anthony Aarons at aaarons@bloomberg.net, Andrew Blackman

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