Federal and state governments decide on comprehensive measures to mitigate the consequences of the Corona crisis
The German Federal Parliament and the Federal Council adopted a legislative package to mitigate the consequences of the COVID 19 pandemic. It introduces temporary amendments and additions to civil, insolvency and criminal procedure law. You can find the legal text here.
The obligation to file for insolvency and the related payment prohibitions are suspended until 30 September 2020 unless the insolvency is not caused by the effects of the COVID 19 pandemic or there is no prospect to eradicate the illiquidity. It is also intended to create incentives to provide the companies concerned with new liquidity and to maintain business relations with them. For a three-month transitional period, the right of creditors to request the opening of insolvency proceedings is suspended as well. The suspension of the obligation to file for insolvency as well as the reasons for opening insolvency proceedings due to a creditors request can be extended by decree until 31 March 2021.
In civil law, Article 240 of the Introductory Act to the Civil Code introduces provisions limited until 30 June 2020, allowing debtors who are unable to fulfil their contractual obligations due to the COVID 19 pandemic to temporarily refuse or suspend performance without suffering adverse legal consequences. The aim is to ensure that consumers and micro-enterprises are not cut off from basic services such as electricity, gas and telecommunications.
For leases of real estate or premises, the right of landlords to terminate a lease is restricted. With regard to consumer loan agreements, a legal deferral provision and an adjustment of the contract after the deferral period is introduced, opening up the possibility for the contracting parties to find a different contractual solution. This is accompanied by statutory protection against termination of employment. If the period up to June 2020 is not sufficient, the Federal Government may extend the time limits by decree.
In order to enable the affected companies of various legal forms to make all necessary decisions and remain capable of acting even if the restrictions on the possibilities of assembly continue to exist, temporary simplifications are being made for the holding of general meetings, shareholders' meetings and meetings of representatives as well as general meetings of associations.
Further details can be found on the homepage of the Federal Ministry of Justice.
In addition, the federal and state governments have initiated numerous other measures, especially for companies. These include, among other things, relief for short-time working benefits, support programs to improve liquidity (loans from KfW, a German public banking institution), state compensation obligations and, in particular, reliefs in the area of tax and social security law.
Numerous details and links to further information can be found in the FAQ catalogue of the Federal Chamber of Tax Consultants.
English investment company Endless acquires golf fashion company Golfino
The English investment company Endless takes over golf fashion label Golfino from insolvency. Endless is an English investment company and owner of the largest European golf retailer American Golf. With the acquisition of Golfino, Endless is expanding its house brands oriented business even further. The Golfino headquarters will remain in Glinde, from where the e-commerce and wholesale business divisions will be expanded. The business segment stationary retail, however, had to be closed down. The brand will be continued and strengthened and high-quality golf clothing combined with first-class service will continue to be offered in the future. Further details can be found here.
Hairdressing chain Klinck successfully restructured via insolvency plan
On January 8, 2020, the creditors of the insolvent hairdressing chain Klinck unanimously approved the insolvency plan presented by insolvency administrator Dr. Jens-Sören Schröder. The insolvency court confirmed the plan at the same meeting. Now that the time limits for appeals have expired, the insolvency proceedings can be suspended in a few weeks' time and operations of the long-established Kiel-based company, which employs 530 people in 66 salons in seven federal states, can continue. This means that the company remains within the third generation of the Klinck family that supports the restructuring with a substantial shareholder contribution.
In the course of the insolvency proceedings opened in February 2019, extensive operational restructuring measures were carried out in cooperation with industry expert Dieter Bonk. About 30% of the salons were non-profitable and had to be closed, reducing administrative expenses significantly. This and a bundle of other measures enabled the turnaround. Creditors have reason to be pleased as well, as they have the prospect of a far above-average quota of more than 50%.
Learn more here.
Golfino files for insolvency - M&A process continues
Golfino AG filed for insolvency on November 15, 2019. The Local Court of Reinbek has appointed lawyer Dr. Jens-Sören Schröder as provisional insolvency administrator.
After having incurred significant losses in the last two financial years, the company worked out a comprehensive turnaround concept in cooperation with a specialized restructuring consultancy, which is currently being implemented. An investor process was initiated to generate capital, which is now being continued in the insolvency opening proceedings.
Golfino is one of the European market leaders in golf clothing. The crisis was triggered by declining sales and gross profit.
The Management Board of the company and the provisional insolvency administrator see good chances for a continuation of the business. The Golfino brand has an excellent international reputation, outstanding product quality and has for years been characterized by a style of sporty elegance that has been refreshed time and again. Based on a relaunch last year, the e-commerce division is growing well above the average market trend.
The payment of employees is secured by a financing concept under German Insolvency Law ("Insolvenzgeldvorfinanzierung") which the provisional insolvency administrator has already initiated. In addition to the holding company Golfino AG, the group also includes five fully owned subsidiaries. The AG has 208 employees, the subsidiaries another 60.
Axxum takes over traditional packaging company akf siemers
The well-known Wuppertal-based packaging and logistics service provider Axxum is taking over the operations of akf siemers hamburg, akf siemers airport and akf siemers handling by way of a transferring restructuring. This means that 90% of the 82 jobs will be retained. The company was founded in 1886 by Adolf Siemers in Hamburg under the name "Packkistenfabrik Adolf Siemers". As akf siemers-group, it was one of the oldest and largest industrial goods and export packaging companies in Hamburg. Prior to this, the Hamburg District Court had opened insolvency proceedings under self-administration. The self-administration was accompanied by lawyer Matthias Krämer from Wellensiek. The insolvency court appointed lawyer Dr. Jens-Sören Schröder from Johlke Niethammer as administrator. Further details can be found under Binnenschiffahrt-Online.
EU directive on the preventive restructuring framework adopted - new opportunities for pre-insolvency restructuring
On March 28, 2019, the EU parliament passed the directive on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt ("Directive on restructuring and insolvency"). This creates the basis for a uniform legal framework for preventive restructuring within the EU.
The central element of the restructuring framework is the restructuring plan. In a restructuring plan, restructuring measures can be decided by the affected creditor groups with a majority and not only unanimously as is usually the case in out-of-court restructuring. The majority requirements are determined by the individual member states, they may however not exceed 75% under the directive.
The directive sets the member states a period of two years for implementation, which may be extended by one year. The introduction of a preventive restructuring framework in Germany can therefore be expected in 2021 or 2022. The text of the EU directive can be found in the official journal of the European Union.
Puan Klent Foundation can withdraw insolvency application
The Puan Klent Foundation had fallen into financial difficulties and filed for insolvency in December 2017. In cooperation with the City of Hamburg, business consultant Horst Bötcher, who specializes in lodging establishments, and provisional insolvency administrator Dr. Jens-Sören Schröder, ways were found to avert the opening of insolvency proceedings and to ensure the continued operation of the recovery home. Further details can be found here.
Continuation solution achieved for Rickmers Group
Rickmers Holding AG as well as other group companies as sellers and a consortium around the Zeaborn Group with the participation of Hamburg-based shipowner Bertram R.C. Rickmers as buyers signed a purchase agreement on 7th September 2017 to take over the worldwide ship management activities of the Rickmers Group with main sites in Hamburg, Singapore and Cyprus. An insolvency plan will now be prepared for the remaining parts of the group.
Rickmers Holding AG had filed for insolvency on 1 June 2017. Since then, the operative shipping and business operations of the Rickmers Group had been continued under provisional self-administration. On 5th September 2017, the Hamburg Local Court opened insolvency proceedings on the assets of Rickmers Holding AG in accordance with the application and allowed for self-administration. The Board of Directors of Rickmers Holding AG will be supported by lawyer Dr. Christoph Morgen from Brinkmann & Partner as "Chief Insolvency Officer". Lawyer Dr. Jens-Sören Schröder from Johlke Niethammer & Partner was appointed as administrator by the Hamburg District Court, as was already the case in the preliminary proceedings.
Further details in Wirtschaftswoche.
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