Today, the German federal parliament (Bundestag) has approved unprecedented action to address the economic impact of the COVID-19 crisis on businesses.
The legislation is part of a ‘protective shield’ providing businesses with sufficient liquidity to master the crisis. Such ‘protective shield’ consists of four pillars, namely
- new and unlimited measures to provide liquidity to companies through special KfW programs
- tax-related liquidity assistance
- an expansion of the short-time compensation benefits (Kurzarbeitergeld) program and
- strengthened European cohesion.
As part of this shield, the Bundestag passed today a law providing relief regarding specific civil, corporate and insolvency law related aspects of the COVID-19 crisis, including the possibility to hold virtual general meetings of stock corporations, a moratorium regarding rent and lease agreements and the suspension of the obligation to file for insolvency.
Further, the Bundestag has approved the establishment of a so-called Economy Stabilization Fund (Wirtschaftsstabilisierungsfonds) which shall provide medium and large companies with guarantees of up to EUR 400 billion to facilitate a refinancing on the capital market. The fund shall further be entitled to sign up for equity participations of up to EUR 100 billion to avoid insolvencies and to provide loan facilities of up to EUR 100 billion to finance special KfW programs.
The legislation is expected to pass the German federal council (Bundesrat) on Friday, March 27, 2020.
For additional insights into the business and legal implications of the COVID-19 pandemic, please visit our Knowledge Center.
