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The expanding scope of the Coronavirus has created uncertainty and anxiety on a global scale, encompassing both public health and economic impacts. As business leaders around the world grapple with a wide range of questions, Paul Hastings is here to help.

 

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First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

Mar 17, 2020, 13:45 PM
Publication Type(s):
Client Alerts
Exlcude on home page:
No
  1. Introduction

    The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

    As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

  2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

    On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

    The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

    The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

    In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

    The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

  3. Liquidity Support

    As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

    1. Tax deferrals and other tax measures

      In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

      Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

    2. Liquidity assistance through KfW (a German state-owned bank)

      Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

      Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

      Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

      In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

    3. Other liquidity assistance provided by Federal States (Bundesländer)

      In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

  4. Suspension of the duty to file for insolvency

    The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

    Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

    To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

    The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

    • the reason for insolvency is based on the effects of the corona epidemic, and
    • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

We will continue to inform you as soon as this measure comes into effect or further information becomes available.

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  • europe
  • client alerts

Linked PracticeAreas

1 comment

Leave a comment
  1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
    Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

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    Client Alert

    First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

    Mar 17, 2020, 13:45 PM
    Publication Type(s):
    Client Alerts
    Exlcude on home page:
    No
    1. Introduction

      The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

      As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

    2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

      On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

      The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

      The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

      In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

      The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

    3. Liquidity Support

      As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

      1. Tax deferrals and other tax measures

        In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

        Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

      2. Liquidity assistance through KfW (a German state-owned bank)

        Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

        Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

        Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

        In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

      3. Other liquidity assistance provided by Federal States (Bundesländer)

        In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

    4. Suspension of the duty to file for insolvency

      The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

      Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

      To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

      The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

      • the reason for insolvency is based on the effects of the corona epidemic, and
      • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

    We will continue to inform you as soon as this measure comes into effect or further information becomes available.

    IsRss:
    • cares act
    • europe
    • client alerts

    Linked PracticeAreas

    1 comment

    Leave a comment
    1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
      Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

      Leave a comment

      LABOR & EMPLOYMENT

      First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

      Mar 17, 2020, 13:45 PM
      Publication Type(s):
      Client Alerts
      Exlcude on home page:
      No
      1. Introduction

        The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

        As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

      2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

        On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

        The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

        The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

        In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

        The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

      3. Liquidity Support

        As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

        1. Tax deferrals and other tax measures

          In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

          Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

        2. Liquidity assistance through KfW (a German state-owned bank)

          Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

          Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

          Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

          In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

        3. Other liquidity assistance provided by Federal States (Bundesländer)

          In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

      4. Suspension of the duty to file for insolvency

        The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

        Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

        To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

        The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

        • the reason for insolvency is based on the effects of the corona epidemic, and
        • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

      We will continue to inform you as soon as this measure comes into effect or further information becomes available.

      IsRss:
      • cares act
      • europe
      • client alerts

      Linked PracticeAreas

      1 comment

      Leave a comment
      1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
        Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

        Leave a comment

        FINANCIAL REGULATION & THE CARES ACT

        First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

        Mar 17, 2020, 13:45 PM
        Publication Type(s):
        Client Alerts
        Exlcude on home page:
        No
        1. Introduction

          The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

          As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

        2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

          On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

          The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

          The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

          In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

          The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

        3. Liquidity Support

          As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

          1. Tax deferrals and other tax measures

            In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

            Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

          2. Liquidity assistance through KfW (a German state-owned bank)

            Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

            Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

            Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

            In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

          3. Other liquidity assistance provided by Federal States (Bundesländer)

            In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

        4. Suspension of the duty to file for insolvency

          The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

          Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

          To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

          The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

          • the reason for insolvency is based on the effects of the corona epidemic, and
          • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

        We will continue to inform you as soon as this measure comes into effect or further information becomes available.

        IsRss:
        • cares act
        • europe
        • client alerts

        Linked PracticeAreas

        1 comment

        Leave a comment
        1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
          Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

          Leave a comment

          ASSET MANAGEMENT

          First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

          Mar 17, 2020, 13:45 PM
          Publication Type(s):
          Client Alerts
          Exlcude on home page:
          No
          1. Introduction

            The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

            As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

          2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

            On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

            The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

            The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

            In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

            The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

          3. Liquidity Support

            As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

            1. Tax deferrals and other tax measures

              In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

              Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

            2. Liquidity assistance through KfW (a German state-owned bank)

              Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

              Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

              Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

              In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

            3. Other liquidity assistance provided by Federal States (Bundesländer)

              In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

          4. Suspension of the duty to file for insolvency

            The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

            Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

            To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

            The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

            • the reason for insolvency is based on the effects of the corona epidemic, and
            • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

          We will continue to inform you as soon as this measure comes into effect or further information becomes available.

          IsRss:
          • cares act
          • europe
          • client alerts

          Linked PracticeAreas

          1 comment

          Leave a comment
          1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
            Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

            Leave a comment

            TAX LAW

            First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

            Mar 17, 2020, 13:45 PM
            Publication Type(s):
            Client Alerts
            Exlcude on home page:
            No
            1. Introduction

              The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

              As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

            2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

              On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

              The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

              The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

              In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

              The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

            3. Liquidity Support

              As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

              1. Tax deferrals and other tax measures

                In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

              2. Liquidity assistance through KfW (a German state-owned bank)

                Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

              3. Other liquidity assistance provided by Federal States (Bundesländer)

                In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

            4. Suspension of the duty to file for insolvency

              The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

              Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

              To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

              The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

              • the reason for insolvency is based on the effects of the corona epidemic, and
              • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

            We will continue to inform you as soon as this measure comes into effect or further information becomes available.

            IsRss:
            • cares act
            • europe
            • client alerts

            Linked PracticeAreas

            1 comment

            Leave a comment
            1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
              Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

              Leave a comment

              REAL ESTATE & HOSPITALITY

              First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

              Mar 17, 2020, 13:45 PM
              Publication Type(s):
              Client Alerts
              Exlcude on home page:
              No
              1. Introduction

                The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

              2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

              3. Liquidity Support

                As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                1. Tax deferrals and other tax measures

                  In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                  Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                2. Liquidity assistance through KfW (a German state-owned bank)

                  Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                  Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                  Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                  In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                3. Other liquidity assistance provided by Federal States (Bundesländer)

                  In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

              4. Suspension of the duty to file for insolvency

                The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                • the reason for insolvency is based on the effects of the corona epidemic, and
                • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

              We will continue to inform you as soon as this measure comes into effect or further information becomes available.

              IsRss:
              • cares act
              • europe
              • client alerts

              Linked PracticeAreas

              1 comment

              Leave a comment
              1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
                Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

                Leave a comment

                DISPUTES

                First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

                Mar 17, 2020, 13:45 PM
                Publication Type(s):
                Client Alerts
                Exlcude on home page:
                No
                1. Introduction

                  The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                  As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

                2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                  On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                  The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                  The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                  In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                  The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

                3. Liquidity Support

                  As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                  1. Tax deferrals and other tax measures

                    In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                    Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                  2. Liquidity assistance through KfW (a German state-owned bank)

                    Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                    Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                    Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                    In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                  3. Other liquidity assistance provided by Federal States (Bundesländer)

                    In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

                4. Suspension of the duty to file for insolvency

                  The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                  Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                  To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                  The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                  • the reason for insolvency is based on the effects of the corona epidemic, and
                  • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

                We will continue to inform you as soon as this measure comes into effect or further information becomes available.

                IsRss:
                • cares act
                • europe
                • client alerts

                Linked PracticeAreas

                1 comment

                Leave a comment
                1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
                  Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

                  Leave a comment

                  PRIVACY & CYBERSECURITY

                  First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

                  Mar 17, 2020, 13:45 PM
                  Publication Type(s):
                  Client Alerts
                  Exlcude on home page:
                  No
                  1. Introduction

                    The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                    As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

                  2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                    On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                    The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                    The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                    In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                    The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

                  3. Liquidity Support

                    As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                    1. Tax deferrals and other tax measures

                      In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                      Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                    2. Liquidity assistance through KfW (a German state-owned bank)

                      Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                      Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                      Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                      In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                    3. Other liquidity assistance provided by Federal States (Bundesländer)

                      In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

                  4. Suspension of the duty to file for insolvency

                    The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                    Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                    To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                    The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                    • the reason for insolvency is based on the effects of the corona epidemic, and
                    • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

                  We will continue to inform you as soon as this measure comes into effect or further information becomes available.

                  IsRss:
                  • cares act
                  • europe
                  • client alerts

                  Linked PracticeAreas

                  1 comment

                  Leave a comment
                  1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
                    Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

                    Leave a comment

                    SECURITIES & CAPITAL MARKETS

                    First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

                    Mar 17, 2020, 13:45 PM
                    Publication Type(s):
                    Client Alerts
                    Exlcude on home page:
                    No
                    1. Introduction

                      The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                      As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

                    2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                      On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                      The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                      The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                      In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                      The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

                    3. Liquidity Support

                      As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                      1. Tax deferrals and other tax measures

                        In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                        Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                      2. Liquidity assistance through KfW (a German state-owned bank)

                        Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                        Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                        Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                        In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                      3. Other liquidity assistance provided by Federal States (Bundesländer)

                        In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

                    4. Suspension of the duty to file for insolvency

                      The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                      Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                      To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                      The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                      • the reason for insolvency is based on the effects of the corona epidemic, and
                      • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

                    We will continue to inform you as soon as this measure comes into effect or further information becomes available.

                    IsRss:
                    • cares act
                    • europe
                    • client alerts

                    Linked PracticeAreas

                    1 comment

                    Leave a comment
                    1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
                      Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

                      Leave a comment

                      EUROPE

                      First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

                      Mar 17, 2020, 13:45 PM
                      Publication Type(s):
                      Client Alerts
                      Exlcude on home page:
                      No
                      1. Introduction

                        The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                        As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

                      2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                        On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                        The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                        The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                        In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                        The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

                      3. Liquidity Support

                        As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                        1. Tax deferrals and other tax measures

                          In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                          Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                        2. Liquidity assistance through KfW (a German state-owned bank)

                          Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                          Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                          Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                          In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                        3. Other liquidity assistance provided by Federal States (Bundesländer)

                          In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

                      4. Suspension of the duty to file for insolvency

                        The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                        Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                        To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                        The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                        • the reason for insolvency is based on the effects of the corona epidemic, and
                        • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

                      We will continue to inform you as soon as this measure comes into effect or further information becomes available.

                      IsRss:
                      • cares act
                      • europe
                      • client alerts

                      Linked PracticeAreas

                      1 comment

                      Leave a comment
                      1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
                        Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

                        Leave a comment

                        LATIN AMERICA

                        First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

                        Mar 17, 2020, 13:45 PM
                        Publication Type(s):
                        Client Alerts
                        Exlcude on home page:
                        No
                        1. Introduction

                          The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                          As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

                        2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                          On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                          The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                          The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                          In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                          The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

                        3. Liquidity Support

                          As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                          1. Tax deferrals and other tax measures

                            In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                            Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                          2. Liquidity assistance through KfW (a German state-owned bank)

                            Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                            Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                            Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                            In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                          3. Other liquidity assistance provided by Federal States (Bundesländer)

                            In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

                        4. Suspension of the duty to file for insolvency

                          The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                          Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                          To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                          The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                          • the reason for insolvency is based on the effects of the corona epidemic, and
                          • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

                        We will continue to inform you as soon as this measure comes into effect or further information becomes available.

                        IsRss:
                        • cares act
                        • europe
                        • client alerts

                        Linked PracticeAreas

                        1 comment

                        Leave a comment
                        1. Canon Pixma ts3122 Wireless Setup | Jul 02, 2020
                          Its always good to have tips on good blog posting. As I just started posting comments for blog and faced a lot of rejections. I think your suggestion would be helpful for me. I will let you know if this works for me. Canon Pixma ts3122 Wireless Setup

                          Leave a comment

                           

                          KEY INSIGHTS

                          First German Legislative Support Due to COVID-19 and Granting Liquidity Lifelines

                          Mar 17, 2020, 13:45 PM
                          Publication Type(s):
                          Client Alerts
                          Exlcude on home page:
                          No
                          1. Introduction

                            The situation due to the coronavirus has resulted in a massive disruption and to some extent even in a complete standstill of public and social life with far-reaching consequences for the national and international economy. The recent border closures will have a further impact on the movement of people and goods.

                            As a result, the German Federal Government has announced that it will provide several instruments to reduce the impact of the situation:

                          2. Improved Short-Time Work Compensation (Kurzarbeitergeld)

                            On Friday, 13 March 2020, the German Bundestag unanimously adopted a temporary improvement in the regulations for short-time work compensation.

                            The regulation comes into (retroactive) force as of 1 March. Consequently, the short-time work compensation is available as a crisis instrument retroactively from 1 March on.

                            The short-time work compensation in fact requires a considerable loss of work. These pre-requisites are met if the loss of working hours:

                            In addition to the short-time work compensation, employers will receive reimbursement in full for the social security contributions which they have to pay even in the event of short-time working.

                            The short-time work compensation is primarily intended to support companies that are suffering from supply bottlenecks or have to be closed down by the authorities due to health concerns. Given current developments, it is conceivable that this instrument will also be of interest to other companies.

                          3. Liquidity Support

                            As part of the package to tackle the corona crisis, the German Federal Government has adopted further measures:

                            1. Tax deferrals and other tax measures

                              In order to improve the liquidity of companies by tax measures, the German Federal Government has facilitated the deferral of tax payments. As a further measure, advance tax payments can be reduced for the benefit of the respective taxpayers. It was also announced that the enforcement of defaulting taxes and the imposition of surcharges for late payment will be waived for the time being. In other words: either the liquidity situation is directly improved or already existing tax liabilities do not have to be taken into account when a company has to undergo the insolvency test. 

                              Finally, the statutory default interest of 6% p.a. on tax liabilities will be waived for the time being.

                            2. Liquidity assistance through KfW (a German state-owned bank)

                              Furthermore, companies are to receive facilitated liquidity support. To this end, the existing programs for liquidity support provided by KfW will be expanded and made available to more companies, for example through KfW- and ERP-loans. These liquidity supports are not grants but loans.

                              Companies can obtain loans for investments, among other things, but especially also to fund ongoing operations.

                              Financing is generally provided through intermediary house banks and financing partners under the existing KfW programs. For these loans KfW assumes the default risk.

                              In addition, KfW is commencing special new programs. Under these programs, KfW will increase its risk assumption. Moreover, KfW is poised to offer syndicated structures.

                            3. Other liquidity assistance provided by Federal States (Bundesländer)

                              In addition to federal aid, some Federal States have also promised to provide additional support. In Bavaria, for example, a ten billion euro aid package has been put together to support the economy. Among other things, special guarantee frameworks and immediate financial aid between 5,000 and 30,000 euros will be available to support smaller businesses.

                          4. Suspension of the duty to file for insolvency

                            The German legislature is also preparing a change in law to suspend the duty to file for insolvency in order to protect companies that fall into economic and thus financial turmoil due to the corona epidemic.

                            Under German insolvency law, a company is obliged to file for insolvency without delay, but at the latest within three weeks, if a reason to file comes into existence (due to bankruptcy and/or over-indebtedness). A violation of this duty to file for insolvency may lead to criminal prosecution of the responsible manager(s) and to personal liability.

                            To mitigate these legal and economic consequences, the German legislature is planning a suspension of this duty to file for insolvency until 30 September 2020 in order to give the companies concerned time (i) to take advantage of the state aid measures envisaged and (ii) thus to ultimately avert insolvency.

                            The pre-conditions for the suspension of the duty to file for insolvency will most likely be that:

                            • the reason for insolvency is based on the effects of the corona epidemic, and
                            • there are reasonable prospects of remediation of the insolvency situation (i.e., a positive going concern prognosis).

                          We will continue to inform you as soon as this measure comes into effect or further information becomes available.

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