Germany is trying to delay the inevitable wave of bankruptcies

Angela Merkel’s government prepares to weaken the criteria for corporate insolvency as Germany faces its biggest economic downturn since World War II.

Due to the coronavirus pandemic in the second quarter of 2020, the German economy contracted by an unprecedented 9.7%. Realizing the inevitability of mass company closings and layoffs, the authorities are taking desperate measures.

“Companies that can show lenders a realistic perspective on restructuring should be able to implement their vision outside of bankruptcy proceedings”, – said Justice Minister Christine Lambrecht.

Berlin had previously allowed companies to postpone bankruptcy proceedings until the end of the year. The new reform, which will take effect in early 2021, implies softer criteria for assessing debt.

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