The German government said on Monday it is planning to shield companies from going under because of the coronavirus pandemic, by suspending legal obligations for firms facing acute liquidity problems to file for bankruptcy.
The suspension until the end of September is aimed at giving companies breathing space to obtain credit already promised by the government.
“We want to prevent companies from having to file for insolvency because the promised help from the government has not arrived in time” because of administrative processes, Justice Minister Christine Lambrecht said.
Under current rules, companies that are facing cash-flow problems have to file for bankruptcy within three weeks – a timeframe that may be too short to clear bureaucratic hurdles for government aid.
Berlin on Friday promised companies “unlimited” credit to keep them afloat, as part of an economic package reaching at least €550 billion ($614 billion) initially – the biggest in Germany’s post-war history.
Operators in the tourism and service industries are among likely candidates for the help, as they count among the most severely hit by the pandemic which has put much of Europe in lockdown.
Tourism and hotel group TUI said early on Monday it was applying for state aid to keep it afloat, as it suspended the “majority” of its operations over the virus.
German airline giant Lufthansa meanwhile has been forced to scrap around two thirds of its flights in coming weeks as several countries including the US ban travellers from Europe.
With travel restrictions multiplying by the day, the group has seen its stock price halved since January.