The Corona crisis and its immediate effects on the economy
While at the end of 2019 the topic of coronavirus or Covid-19 was still perceived in Germany as a purely Chinese “problem”, events in this country overtook each other at the latest with the first appearance of the virus in larger companies such as Webasto at the end of January. When the dramatic events in Italy, which were accompanied by a stagnation of public life and the economy, suddenly the virus was very close. It has now also become clear beyond the Alps what disastrous consequences this pandemic will most probably have, not only in Germany, but throughout Europe and the world.
Politicians reacted with the measures known to us, which economic and social life in Germany in an unprecedented way. operation closures, the discontinuation of gastronomy and stationary trade and the restriction of the freedom of travel and trade now also in Germany led to an almost total standstill of the economy and public life. From one day to the next, nothing was the same as before the pandemic. In einer auf maximale Effizienz und Gewinnorientierung getrimmten Wirtschaft ist an ein reguläres Wirtschaften und Arbeiten in der uns gewohnten Weise auf absehbare Zeit nicht möglich. The harsh but inevitable economic consequences, which go hand in hand with the consistent action policy not only affect enterprises of all types and sizes, but will also have massive consequences for the labour market. Bereits schon heute (Stand: 30. April 2020) wurde ein Großteil der Arbeitnehmer und Arbeitnehmerinnen seit mehreren Wochen auf Kurzarbeitergeld gesetzt und müssen somit auf einen erheblichen Teil ihres Einkommens verzichten. Beyond this fact, the first personnel saving measures are already emerging, not only among the major employers in this country.
The corona crisis as the beginning of a global wave of insolvencies
Policy measures to limit the economic impact on businesses and workers
At this point, we would like to give you a brief overview of the most important measures with which politicians are attempting to cushion economic consequences for companies, employees and their relatives. Subsequently, we have put together various topics for entrepreneurs and privates who are already reaching us regularly from our clientèle.
In brief, the economic measures can be summarised as follows: The Federal Government as well as the governments of the Länder have provided grants within the framework of emergency aid for enterprises and one-off aid payments to secure the short-term liquidity of enterprises. Es ist bereits jetzt abzusehen, dass diese Beträge, sofern rechtzeitig gewährt, nicht reichen werden und in den nächsten Tagen und Wochen bei den meisten Unternehmen aufgebraucht sein werden. In order to relieve the burden on enterprises, further measures were taken to reduce the burden on enterprises and the labour market. For example, the use of short-time work and the duration of this measure has been eased and the corresponding payments increased. The current catalogue of measures of the government and the federal states now envisages securing further liquidity and investments by facilitating access to credit and loans. As last resort, the action plan provides for the protection of large companies from ruin by state participation. It is probably foreseeable that for many companies, further indebtedness is not an option to hold out until a uncertain start of public life. The insolvency wave will come, that’s as good as certain. But insolvency can also be an opportunity for a reorientation and restructuring of the company.
For private persons, the situation currently looks similarly problematic: For example, short-time work means a medium-term lower income for currently almost indefinite periods. Planning uncertainty and payment difficulties for rents and loansof any kind are already causing obvious difficulties for many employees. Thus, the measures have not only direct effects on the liquidity of private individuals and the servicing of current financial obligations, but also indirect consequences for the retail sector through falling consumption and changed purchasing behaviour. A noticeable increase in prices in the area of food and everyday necessities complicates the current burden, especially for single parents and families.
Current relevant topics on corona crisis and insolvency for companies
- taxation of aid and grants
- insolvency protraction through corona grants
- reorganisation of the ailing company due to imminent insolvency
- Late preparation of balance sheets and imminent insolvency
- stumbling block short-time work compensation for companies
- Transfer of payments from the government aid package
- Lack of assurances for start-ups by VC or Business Angels
- The corona crisis as a decisive factor for the insolvency of a previously “healthy” company
Current relevant topics on the corona crisis and insolvency for private individuals
- debt trap short-time work for families
- disproportionality of short-time work and work performance
- Suspension of payments such as rent and other financial obligations
- deferral trap for current loans and costs
- liquidation of existing insurance policies and contracts
How we support you in the event of an insolvency in the Corona crisis:
- Advice on avoiding company insolvency
- Advice on avoiding private insolvency
- Advice and support in the run-up to a threatening insolvency for the healthy restructuring of a company
- Beratung bei steuerlichen Fragen im Umfeld von staatliche Förderungen und Krediten im Zusammenhang mit der Corona Krise
- Assertion of claims for damages
- Settlement of canceled contracts and agreements in connection with the corona crisis
- Liquidation and reorganisation
- Advice and representation in judicial disputes also internationally
Helpful articles on the subject of insolvency law:
Our office in Munich
You will find our office at Fasolt-Strasse 7 in Munich, very close to Schloss Nymphenburg. Our team consists of highly motivated attorneys who are available for all the needs of our clients. In special cases, our law firm cooperates with selected experts to represent your interests in the best possible way.
About the author
PhD, MBA, MM
Dr. Johannes Fiala has been working for more than 25 years as a lawyer and attorney with his own law firm in Munich. He is intensively involved in real estate, financial law, tax and insurance law. The numerous stages of his professional career enable him to provide his clients with comprehensive advice and to act as a lawyer in the event of disputes.
»More about Dr. Johannes Fiala
On these pages, Dr. Fiala provides information on current legal and economic topics as well as on current political changes that are of social and/or corporate relevance.
Arrange your personal appointment with us.
You are already receiving legal advice and would like a second opinion? In this case please contact Dr. Fiala directly via the following link.
(The first phone call is a free get-to-know-you conversation; without consulting. You will learn what we can do for you & what we need from you in terms of information, documents for a qualified consultation.)