A moratorium on bankruptcy by Germans: how the law works in Germany

Many experts unanimously say that the economic consequences of the coronavirus pandemic will be felt for a long time after the health situation returns to normal. That is why it is so important to support the business at the state level now.

It is known that the Government of the Russian Federation introduced a six-month moratorium on bankruptcy of the companies with a provision of its possible extension if it is necessary. But Russia is not the only country where such measures are introduced.

In Germany, in particular, a law that introduced a moratorium on bankruptcy, entered into force not so long ago. But in German realities, it rather protects the debtors, while the Russian one protects the creditors.

The law provides for the possibility of obtaining the interest-free loans for all the companies that encountered financial difficulties during a pandemic.

In Germany, they did not begin to single out the specific organizations and compile lists of those who would receive the support. In this case, there is only one criterion for getting the state support - the company was not insolvent as at December 31, 2019.

In addition, the German law provides for the possibility of a more free use of assets. There are no requirements for making the deals, the value of which does not exceed 1% of the book value of assets, as in Russia.

Thus, the debtors are given more freedom of action with the expectation of their consciousness and integrity. According to the experts, such a mechanism should work among law-abiding and pedantic Germans.