Berlin (dpa) – The obligation to apply for insolvency in Germany is to be suspended until the end of the year, Chancellor Angela Merkel’s cabinet agreed on Wednesday, extending a lifeline to struggling businesses during the coronavirus pandemic.
Normally, a company must apply for insolvency within three weeks of the onset of their illiquidity or over-indebtedness.
The rules were first suspended back in March, as international lockdown measures dealt severe blows to a number of key industries, and were initially scheduled to come back into effect this month.
The German parliament is yet to approve the extension.
“Returning to a strict application of the over-indebtedness rules would be counterproductive at this current time,” Justice Minister Christine Lambrecht said in Berlin.
She argued that the companies currently struggling to stay afloat can get back on their feet in time, so the measure is intended to prevent a wave of insolvencies and protect jobs.
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