by Frank GrellDr. Jörn KowalewskiDr. Ulrich Klockenbrink

The Federal Ministry of Justice and Consumer Protection (BMJV) is currently finalizing the law to mitigate the consequences of the COVID-19 pandemic in civil, insolvency, and criminal proceedings with extraordinary commitment. It shall be adopted less than two weeks after the beginning of the extensive restrictions on public life and the economy in Germany due to the COVID-19 pandemic.

A central element of the law is to facilitate the raising of debt capital in order to support companies in the current situation. For this purpose:

  • liability risks in connection with the granting of loans are reduced,
  • contestation events under insolvency law are temporarily alleviated with regard to collateralization and redemptions of new financing, and
  • subordination of new shareholder loans is temporarily suspended.

by Prof. Dr. Thomas Grützner, Joachim Grittmann

Companies should consider how to avoid liability risks in light of the measure.

On 22 March 2020, the German federal government agreed with the minister presidents of the federal states (Bundesländer) to introduce nationwide contact bans. However, this action does not exclude the possibility that federal states or individual districts (Landkreise) will continue to issue or maintain stricter regulations. The agreement explicitly provides for such a possibility according to the federal government’s press release. Immediately after the announcement of the agreement on minimum restrictions, the Bavarian state government, for example, announced that it intends to adhere to the stricter regulations already adopted, even if this does not necessarily mean any changes for companies.

Consequently, companies may have to deal with different regulations and different standards of duty —especially if they have establishments (Betriebsstätten) in different federal states, or if employees travel across federal state borders. Companies now have to consider their assortment of duties resulting from the implementation of the regulations adopted — with a focus on how to avoid possible liability risks. Subsequently, they will need to implement various protective measures.