The last overview of the German economy for June 2021 wished us all a relaxed summer (here). So, hey, let’s take a more detailed view whether we still can be relaxed:
After I had already interpreted (here, in German) some rulings of the 9th Civil Senate last year to the effect that the German Federal Civil Court (“Bundesgerichtshof”, “BGH”) was cautiously following the legislator’s intention to attenuate the law on insolvency avoidance with the reform of 2017 (see here for more details), this impression is now strengthened by a recent decision of 6 May 2021.
The overview of the German economy in the previous months always transported some sort of optimism, however, also always with some pessimistic connotation (cf. for the last issue, here). And also for June 2021 this type of “cautious optimism” continues. But, hey, let’s take a more detailed view:
In my short series on the comprehensive reform of insolvency and restructuring law that came into force at the beginning of 2021 (see most recently here and here), I will in the following turn to early risk and crisis warning mechanisms. In the years since the financial crisis, this topic – at the interface with business resilience management (see most recently here) – has tended to lead a wallflower existence. Since the corona pandemic, however, all kinds of forecasts as the core of crisis and early risk detection are once again enjoying undivided attention, at least in the media.
Even four and a half months after the German “Corporate Stabilisation and Restructuring Act” (“Unternehmensstabilisierungs- und -restrukturierungsgesetz”, “StaRUG”) came into force on 1 January 2021, reports of corresponding proceedings are (still?) limited (but see, for example, a decision by the Cologne District Court here, in German). However, the growing pressure to restructure after the final expiry of the suspension of the obligation to file for insolvency is likely to lead to entrepreneurs increasingly examining their remaining options. One option could be the so-called “restructuring moderation” (“Sanierungsmoderation“), which may already be initiated before the actual instruments of the stabilisation and restructuring framework according to §§ 2 et seq. StaRUG can be invoked.
To me, the March ’21 figures implied that – given the then stark rising corona-figures – the German economy was rather “walking on egg-shells” fearing another crash due to the ongoing and soon to be hardened lockdown (cf. here). However, there were signs of hope. Now let’s take a more detailed view into the German economy for April 2021 to see if this hope was indeed warranted:
“It’s not just about doing the right things,
but doing things the right way.”
German insolvency law has been a permanent construction site since the end of the 1970s. This truism will not change even after the SanInsFoG came into force at the beginning of 2021 (see here), as the EU Commission’s efforts to harmonise national insolvency regimes show (here). And it is precisely these EU efforts that, in case of doubt, are more likely to have forced Germany to change its perspective than the previous purely national reforms. After all, the introduction of a “pre-insolvency restructuring procedure” (based on EU requirements) in the form of the StaRUG (see most recently here) and the limitation of the insolvency periods and thus filing obligations, which in the meantime have become quite excessive, chosen by the SanInsFoG to fit into German law should actually direct the focus more on the (out-of-court) restructuring of companies than on insolvency resolution. Nevertheless, I have the impression that the professional discussions are more focused on further increasing the efficiency of insolvency law (“are we doing things right?”) than on increasing effectiveness towards more (sustainable) restructurings.
After the February figures presented a mixed picture while discussions on a “serious” lockdown alienated the economy (here) the question was how the German economy would fare in March 2021. Not too bad, but, hey, let’s take a more detailed view into the German economy: Although (as reported) the “five wise (wo)men” (Wirtschaftsweise) had lowered … more
The German federal government is trying to at least cushion the economic consequences of the Corona pandemic in several ways. One of these is a regulation that is likely to be aimed primarily at retailers severely affected by forced closures, namely to force landlords to adjust rents according to the principle of the so-called “cessation of the implicit of the contractual basis” (“Wegfall der Geschäftsgrundlage“). The following article proves that a hectic rush does not automatically make for the best possible regulation.