Vol 20 (2023) - Issue 4

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In Reaction to the Energy Crisis: Further Relief from the Obligation to File for Insolvency

Synopsis
While the financial burdens of the Covid-19 pandemic in the form of higher debt levels have by no means subsided, the German economy is already facing its next challenge with the current energy crisis. In response to the enormous price increases and fluctuations on the energy and raw materials markets, the German Parliament has passed temporary amendments to the restructuring and insolvency laws. The 'Act on the Temporary Adaptation of Restructuring and Insolvency Law Provisions to Mitigate the Consequences of the Crisis' (in short: Restructuring and Insolvency Law Crisis Consequences Mitigation Act – 'SanInsKG') – which came into force on 9 November 2022 – aims to provide relief for companies that are 'in essence healthy' and capable of surviving in the long term, but for which forward-looking liquidity planning is not possible at the moment, or only possible to a limited extent, due to the current price volatility.
In this newsletter, we summarise the particular decisions made by the German Parliament and assess what effects the relief package is likely to have on the restructuring practice.