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A comprehensive change to German insolvency and restructuring law has become effective starting 1 January 2021. The change allows that a company s reorganization is possible without insolvency and includes the majority decision of its creditors.
In its final session in 2020, the German Bundestag passed the so-called Act on the Further Development of Restructuring and Insolvency Law (SanInsFoG), which will be applicable starting 1 January 2021. The law is based, among other things, on an EU directive that requires all member states to allow non-insolvency restructuring. The expected economic dislocations, as a result of the Covid-19 pandemic, have prompted German lawmakers to bring forward this legislative project and also create additional extensive mitigations for the economic consequences of the lockdown for companies.
Tuesday, January 26, 2021
A comprehensive change to German insolvency and restructuring law has become effective starting 1 January 2021. The change allows that a company s reorganization is possible without insolvency and includes the majority decision of its creditors.
In its final session in 2020, the German Bundestag passed the so-called Act on the Further Development of Restructuring and Insolvency Law (SanInsFoG), which will be applicable starting 1 January 2021. The law is based, among other things, on an EU directive that requires all member states to allow non-insolvency restructuring. The expected economic dislocations, as a result of the Covid-19 pandemic, have prompted German lawmakers to bring forward this legislative project and also create additional extensive mitigations for the economic consequences of the lockdown for companies.