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Germany to extend insolvency moratorium beyond January - Handelsblatt

·1-min read
German Justice Minister Christine Lambrecht arrives for the weekly cabinet meeting in Berlin

BERLIN (Reuters) - Germany wants to extend beyond January a freeze on insolvency rules put in place to avoid a wave of corporate bankruptcies due to the coronavirus pandemic, Justice Minister Christine Lambrecht told the Handelsblatt newspaper.

Last March, the government offered respite to companies that find themselves in financial trouble due to the pandemic by allowing them to delay filing for bankruptcy until the end of September.

In light of a second wave of COVID-19 infections and a stricter lockdown to bring the pandemic under control, Germany's ruling coalition agreed later to extend the insolvency moratorium until the end of January.

"The state provides the economy with extensive financial aid, but it takes time to pay out. Therefore, I am committed to suspending the obligation to file for insolvency for these companies beyond Jan. 31," Lambrecht was quoted as saying.

So far, Germany's private sector has been able to avoid a coronavirus-related wave of bankruptcies due to massive state aid, unprecedented job protection schemes and financial buffers amassed by many small- and medium-sized firms before the crisis.

"We should give these companies the time they need to get back on their feet financially," Lambrecht said, adding that longer insolvency protection played an important role in saving jobs.

Lambrecht did not say when a law to extend the freeze would officially be introduced.

(Reporting by Riham Alkousaa, editing by Emma Thomasson)