bansbach ensuring liquidity in the corona crisis · 2020-04-15 · effectsare still unclear...

ENSURING LIQUIDITY IN THE CORONA CRISIS

2020-04-09

BANSBACH

Agenda

2

STATE AID PROGRAMME2 7

TAX AND LEVY CONCESSIONS3 12

ENSURING BUSINESS LIQUIDITY4 15

YOUR POINT OF CONTACT5 18

ANNEX6 20

INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1 3

DISCLAIMER7 23

Agenda

3

STATE AID PROGRAMME2

TAX AND LEVY CONCESSIONS3

ENSURING BUSINESS LIQUIDITY4

YOUR POINT OF CONTACT5

ANNEX6

INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)1

DISCLAIMER7

Minimum requirements for the provision of KUG (basic provisions & special provisions during CORONA)

4

The basic requirement that must be met for the

provision of a short-time work allowance is a material

loss of working hours

What should you pay attention to: Important adaptations within the CORONA context

• which is due to an unpreventable occurrence or is

imposed by the authorities

• Evidence of a reduced workload must be provided • CORONA-related effects must be clarified

• which is temporary ("with a certain degree of probability

of a return to full capacity operation")

• It must not be related to the effects of typical

seasonal variations

• which is unavoidable (e.g. by using up accrued leave and

accrued time off, paid leave relating to previous years may be claimed where this does not run counter to the

employee's legitimate interests/paid leave already due to

be taken during the KUG period is deemed to be avoidable)*

• Any indication of how residual leave was to be

taken up until 31.03. must be evidenced• Evidence must be provided of how accrued

working hours were used up

• In the case of schemes providing for working hours with a degree of flexibility of at least 10%, any

resultant loss of working hours that exceeds the degree of flexibility is deemed to be unavoidable*

• Waiver of the right to use up time owing

• Provisions governing residual leave unclear

• and at least 1/3 of the labour force has lost at least 10%

of their pay in the respective months (take care when submitting your application at the end of the month)

• The labour force includes employed persons

subject to social security contributions; it does not include members of staff who are sick, on leave or

laid off, nor apprentices or employees undergoing

advanced vocational training

• The limit value for the number of employees affected

by short-time work is reduced to 10%• The application also applies retrospectively (i.e.

even if in March the respective 10% loss of pay no

longer fully comes into play)

The parameter for the criteria is in each case one operating

unit (site, operating division (functionally and technically demarcated unit))

* if w orking hours are accrued as a general rule, the loss of w orking hours indicated w ill be assumed not to be

avoidable if these accrued hours were used up (exceptions are made for special cases)

INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)

Requirements under employment law for the implementation of short-time work

5

Where there is a works council/tariff agreement Where there is no works council/tariff agreement

• Employers may not prescribe an agreement on short-time work.

• The necessary conditions under employment law may exist and/or be created as follows:

• Provisions under tariff agreements for the introduction of short-time work

• Clauses in employment contracts relating to the possibility of introducing short-time work

• Employer-works council agreements may create the necessary condition under employment law if key formal criteria are taken into consideration: commencement and duration, extent of the reduction in working hours, status and distribution of working hours, selection of the employees concerned, and where applicable, times at which there is a complete loss of working hours

• In all the aforementioned cases, the works council must provide its consent (and this must also be documented, respectively confirmed, on the corresponding application forms)

• In businesses in which there is no works council and where there are no provisions in employment contracts or under collective agreements, an individual agreement may be reached with employees (this must however be optional). The annex hereto contains the proposed wording for such an agreement.

• As a last resort, you still have the possibility of dismissals with the option of altered conditions of employment

Other framework conditions, such as for example periods of notice, must moreover be observed. If no such periods have been agreed, then "reasonable" deadlines must

at any rate be observed. The effects that this might have on paid leave (reduced entitlement to paid leave?) and on incentives and bonuses must moreover be clarified.

INFORMATION ON THE SHORT-TIME WORK ALLOWANCE (KUG)

Calculation of the short-time work allowance

6

Initial value 30% short-time work Short-time work incl. KUG

Effects on employees Effects on employersSV (social security

contributions) employer

1,200 EURSV (social security

contributions) employee

1,200 EUR*

tax

1,500 EUR

Net salary

3,300 EUR**

* 20% compounded

** personal tax rate

*** For employees with children, the amount is increased to 67% = 663 EUR

**** + 80% of the dirfference basis of calculation = 1,800 x 0,8 x 20% = 288 EUR

SV (social security


840 EUR

SV social security


840 EUR*

tax

1,050 EUR

Net salary

2,310 EUR**

Net salary difference

990 EUR

SV (social security


840 EUR

SV (social security


840 EUR*

tax

1,050 EUR

Net salary

2,310 EUR**

594 EUR***(60% of 990 EUR)

288 EUR

288 EUR

Payment by

employer, reimbursement

by BA (Federal

Employment Agency)****

Net salary + KUG =

2,904 EUR

→ equates to 88% of

the previous net

salary

Overall effect employer

Gross salary: -2,160 EUR

→ corresponds to 30%

NEW: The Federal

Employment Agency will

now also, as part of the

CORONA KUG, meet the

cost of the adjustment of the

share of SV

The detailedcalculation can be found on KUG 006 form

INFORMATION THE SHORT-TIM WORK ALLOWANCE (KUG)

Brutto-

lohn AN

6.000

EUR

Brutto-

lohn AN

4.200

EUR

Gross salary employer

7,200 EUR

Gross salary employer

5,040 EUR

Agenda

7





ANNEX6


DISCLAIMER7

KfW-Corona-Aid – Express loans for medium-sized companies - Notification

8

KfW-Express loan for medium-sized companies

Express loan for investments and supplies for companies with more than 10 employees with100% federal guarantee

• Max. assessment threshold credit: 3 monthly turnovers of the year 2019

• Companies up to 50 employees max. 500.000 EUR• Companies with more than 50 employees max. 800.000 EUR

• Interest 3 % p.a.

• Term 10 years

Further information: https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html

STATE AID PROGRAMME

N. B.:

The programme has been announced, the details are not completely

known yet, e.g. application and similarity/competitiveness towards

other programmes.

• 100% risk absorption of the KfW

• No risk inspection by the house bank or the KfW Aim fast processing of applications and payout to companies

REQUIREMENTS

• Minumum 10, maximum 250 employees• At least since January 2019 on the market

• Either profit in 2019 or in average of the past 3 years

https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html

KfW [Reconstruction Loan Corporation] Corona Aid - Offer of Loans for Businesses (extract)

9

KfW loans for young enterprises that have

been in the market for less than 5 yearsKfW loans for enterprises that have been

in the market for more than 5 yearsKfW special programme - consortium financing from EUR 25 million upwards

You can apply for up to EUR 1,000 million for each enterprise group. The maximum loan

amount is limited to• 25% of the 2019 annual turnover or

• twice the 2019 payroll costs or

• the current financing requirements for the next 18 months in the case of small and medium-sized enterprises, respectively 12 months in the case of large enterprises, or

• 50% of your business's total indebtedness in the case of loans exceeding EUR 25 million

• Term up to max. 5 years, max. 1 year interest free

• Reduced interest rates between 1,00% and 2,12%

The KfW is involved in consortium financing for supplies and investments. In this

case, the KfW assumes • up to 80% of the risk, albeit

• with a max. of 50% of the risks of the total indebtedness

The KfW's share of the risk is at least EUR 25 million and is limited to

• 25% of the 2019 annual turnover or• twice the 2019 payroll costs or

• the current financing requirements for the next 12 months.

• All banks participating in the consortium may optionally be refinanced by the KfW.

May be applied for by businesses that were as of 31.12.2019 not in difficulties:

• No payment arrears unpaid for more than 30 days• No debt deferral agreements or covenant breaches

• According to current planning, based on an economic situation that returns to normality,

we anticipate the likelihood of the continued financing of businesses up until 31.12.2020.

• Based on an economic situation that returns to normality, there is a positive continuation prognosis

Further information: https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html

STATE AID PROGRAMME

KfW founder loans:

The enterprise is at least 3 years old or has at least to annual reports

KfW business owner loans

N.B.: The application is made via the borrower's bank – it sets out the formal requirements. The approval of the borrower's bank suffices for loans of up to EUR 3 million.

For investment loans and loans for supplies KfW assumes a part of your bank risk (big-sized

companies up to 80%; small and medium-sized companies up to 90%)

With usual bank securities Usual bank securities only for house bank

https://www.kfw.de/KfW-Konzern/Newsroom/Aktuelles/KfW-Corona-Hilfe-Unternehmen.html

Federal state programme with the example of Baden-Württemberg- L-Bank-Corona-Aid - (extract)

10

L-Bank liquidity loan L-Bank growth financing

• For companys which have been doing business on the market for at least 5 years

• Growth financing, also short-term liquidity requirement• Financing of investment costs, stock, supplies

STATE AID PROGRAMME

N.B.: The promotion loans are granted according to borrower`s bank procedures. The decision on loan approvement remains at the borrower`s bank.

You may apply

• Loan volume: 10,000 up to 5 million EUR

• Loan term: 5 year term (loan for supplies), 8, 10, 15 or 20 years

• Interest free 0 up to 3 years• Debt interest reduction and commitment eqaual to loan term, max. 10 years

Start-up financing also for young companies,

• Which have been busy on the market for a maximum of 5 years• From 5,000 EUR up to 5 million EUR

• For freelancers and commercial businesses usually up to max. 500 employees)

• Short-term liquidity requirement• Financing of supplies, consolidations, business takeovers

You may apply

• Loan volume: 10,000 up to usually 5 million EUR

• Loan term: 4, 5, 6, 8 or 10 years (longer than KfW)

• Interest free 0 up to 2 Jahre or 4 years final maturity• Special repayment anytime possible, without prepayment penalty

• Interests individual as per creditworthiness

Federal state programme with the example of Baden-WürttembergGuarantee changes for companies in Baden-Württemberg

11

Guarantor bank

STATE AID PROGRAMME

N.B.: In the event of missing guarantees, e.g. the granting of a already planned liquidity credit or loan for supplies from the borrower`s bank , the guarantor bank or L-

Bank may accept risks by means of a guarantee. Hence costs in case of a declining creditworthiness could be reduced in total by paying a guarantee premium.

• Guarantees up to 2.5 million EUR

Current updates

• The guarantee limit of the guarantor bank has doubled up to 2.5, million (previous: 1,25 million EUR)

• Increase in the possible guarantee quota for supplies up to 80 percent.• Supplement acceleration process for guarantees up to 250,000 EUR agreed upon.

L-Bank

• Guarantees beyond 2.5 to 5 million EUR• Individual guarantees possible

Federal state guarantees

• Guarantees beyond 5 million EUR

• Settlement through L-Bank

State guarantees for loans of the house bank

Baden-Württemberg State Ministry for Economic Affairs, Housing and Employment - Emergency Aid Programme

12

Who is being supported?

• Business enterprises

• Social enterprises

• Sole traders

• Freelance professionals, including artists and performers

with a labour force of up to 50 persons (full-time equivalents).

How are they being supported?

The emergency aid is staggered based on the size of the labour force and is

worth up to:

• Euro 9,000 for three months for sole traders who are entitled to apply and for

those who are entitled to apply with a labour force of up to 5 persons,

• Euro 15,000 for three months for those who are entitled to apply with a labour

force of up to 10 persons,

• Euro 30,000 for three months for those who are entitled to apply with a labour

force of up to 50 persons

The upper limit for the amount of the support corresponds to the liquidity squeeze

or respective drop in turnover caused directly by the corona pandemic, with

however the above-mentioned amounts of support representing the maximum.

Businesses headquartered in Baden-Württemberg are entitled to apply. A de minimis declaration is required as part of the application. Information must be provided on any

de minimis aid already received, where applicable. Applications may be made from this Wednesday (25.03.2020) via the relevant professional association.

In any economic situation arising directly from the corona pandemic and threatening a business's very existence, businesses may apply for a one-off, non-

repayable grant

Basis of calculation:

Drop in turnover: Turnover in month of application < 50% reference period (3 months

from the previous year)

Liquidity requirements: Current liabilities (rent, electricity, etc.) not being met

STATE AID PROGRAMME

Additionally there is a possibility of gaining financial means during the crisis due to the suspendedobligation to file insolvency

13

Starting position of

the company per 31.12.2019

Financial

situation intact

Financial

situation critical

Financial

solvency per 31.12.2019

existent

Financing possibilities

KfW promotional loans

L-Bank promotional loans

Guarantor bank

Direct grants

Federation / State

Hous bank

Consortial banks

Company situation

The respective granting

requirements apply

Here the commonprocedures

and requirements as withrestructuring and rehabilitationcases apply:

• Capital servicingcapabilities

• Restructuring capability• Restructuring concept• Possible granting of

guarantees• Possible shareholer

contributions

Financial

solvencypresentlyexistent

yes

no yes

To be examined further:

• Prossibilities of regaining solvency

• Possible oblibgation to file insolvency

no

Agenda

14





ANNEX6


DISCLAIMER7

15

Overview of tax concessions

TAX AND LEVY CONCESSIONS

Reduction of advance

payments

• For income tax, corporation tax and business tax

• Repayment of advance payments for Q1/2020 already

made

• Reduction to zero of any future advance payments already set

Deferral of tax

payments now due or

that become due

• For income tax, corporation tax and business tax (e.g. tax

assessments for 2019)

• For advance VAT payments also

• All amounts now due or that become due up until 31.12.2020

• No interest charged on deferred payments

Waiver of enforcement

measures

• No seizure of account balances or the like

• Until 31.12.2020

Basic requirements

• Taxpayer must be "directly and not insignificantly" affected

• No high demands on checking the basic requirements

Implementation

• Application to be made to the relevant tax office/competent

authority

• Corresponding forms are now available at tax offices

• When making the application, we recommend providing a brief

statement of reasons with a simplified illustration of the profit or

loss situation expected after taking corona into consideration

Measures

Taxes administered by

Customs/Federal

Central Tax Office

• E.g. energy tax, insurance tax

16

Deferral of social security contributions

Deferral of social

security contributions

• As per announcement of the GKV umbrella organisation dated

March 25, 2020 a deferral of social security contributions is

possible

• Shall be „subordinate“ towards aid packages of the goverment

Short-time work allowance, subsidies and promotional

loans shall be used with priority

• Currently with simplified procedures deferral of social security

contributions for March and April 2020 possible

• Deferral period presently restricted until end of May 2020 (due

date of contributions May 2020)

Potenital extension, depending on development of the

eonomic situation, remains open

• Application required

• No deferral interest or late payment fines

• For already paid contributions (especially March 2020) a

reimbursement may might be possible, but individual

cosultation with the respective health insurance necessary

Basic requirements

• Credible explanation, that major damage occured due to the

pandemic and other supporting or aid measures are exhausted

or not inadequate

• Collection means „significant hardship“; this is the case, if

serious payment difficulties exist or would exist due to the

collction

• But deferral shall not be granted, if a the entitlement would be

jeopardised as a result

Implementation

• Application at the responsible collecting (health insurance); not

at the GKV umbrella organisation!

• In case there are several health insurances involved in a

company the applications have to be made for every single

health insurance separately

• The application is informal and not bound to any special

printed form

• Immediate stop of the direct debit procedures before maturity

Measures

TAX AND LEVY CONCESSIONS

Agenda

17





ANNEX6


DISCLAIMER7

Actions recommended

18

• Implementation of measures to contain the risk of infection and protect the labour force (working from home,

separation of divisions, maintaining social distancing)

• Preparation of emergency plans for the continued operation of the business and curtailment of the negative

consequences

• Ongoing monitoring of health

• Clear rules of conduct

• Establishment of a crisis management team

• Preservation of critical processes

• Regular communication with stakeholders

• Ongoing assessment of the situation and measures to be taken as a result of this

• Uniform communication

• Close consultation with critical suppliers

• Risk assessment for suppliers/primary products

• Establishment/activation of redundant supply channels/crisis response plan

• Ongoing monitoring of developments at customers

• Increase in customer communications

• The situation is developing

dynamically

• There are no empirical values

• Lack of clarity about possible

supply bottlenecks

• Production shutdown at upstream

suppliers

• Logistics bottlenecks

• Staff uncertainty

• Discharging duties of care

Challenges Measures

Staff

Supply chain

Crisis

management

ENSURING BUSINESS LIQUIDITY

19

• Assessment of contractual risks/contractual penalties and checking force majeure clauses

• Checking material adverse change clauses in finance agreements

• Assessment of own loss or damage and of possible compensation payments (insurance, compensation

funds, guarantors, etc.)

• Assessment and preparation of any short-time work, where applicable, and corresponding preparatory

discussions with the works council and/or staff

• Looking into further options for cutting costs, e.g. adaption of deferral options for long-term obligations (e.g.

rents)

• Checking and assessment of insurance payments and claims settlements

• Regular assessment of the financial effects of the development of financing requirements as the result of

updating business planning

• Completion of scenario planning for risk appraisal purposes

• Checking financing possibilities, including the KfW programme and aid fund offered

• Active communication with financing partners

• Checking the options for reducing advance payments and deferring tax

• Multidimensional negative effects

on turnover

• Magnitude currently difficult to

assess

• Turnover shortfalls have a short-

term effect on liquidity

• Additional financing risks as the

result of the deterioration in the

performance of businesses

• Covenant breaches

• Contractual penalties due to late

deliveries

• Contractual clauses in transaction

agreements, finance agreements

Contracts

Liquidity

Situation in

terms of

costs and

results

Challenges Measures

ENSURING BUSINESS LIQUIDITY

Actions recommended

20

The challenge lies in preparing for the after cisis phase in time, whilst clear effects and long-term effects are still unclear

Immediate Measures Stabilisation Phase Revitalising

• Securing delivery capability

• Preparation / Implementation short-work

• Use of deferral possibilities tax / social

securtity

• Implementation of cost cutting measures

• Short-term adaption of a business model

(e.g. in handling of different market

segments / country markets)

• Planning display of the expected economic

effects, including possible changes with

long-term effecting impacts

• Financing concept to be adapted according

to requriement and captal serving capability

• Commence with revitalising concept *

• Start-up capacities

• Adaption of the strategic business modelaccording to the modified frameworkconditions

• Review of the value chains and supplystrategies

• Implementation of the revitalising concepts

• Monitoring of the (finance-) economicalrecovery of the companies

* Escpecially for companies with an actual critical solvency situation and an already difficult course ofbusiness in the year 2019 a comprehensive measure concept shall be developed

At present this phase can only be roughly

outlined or masterminded

Acute Phase

Adaption PhaseAfter Crisis Phase (on loosening of the

restrictions)

Agenda

21





ANNEX6


DISCLAIMER7

We remain at your disposal should you have any further queries

Gaensheidestrasse 67 - 74

70184 StuttgartTelephone: 0711 / 1646 - 6 22

YOUR POINT OF CONTACT

MANUEL TRAUTMANN

Senior Manager

+49 (0) 711 1646-723

+49 (0) 152 0909 3586

[email protected]

TOBIAS GEILER

Partner

+49 (0) 711 1646-742

+49 (0) 174 1520 259

[email protected]

JOBST BARTMER

Senior Manager

+49 (0) 711 1646-735

+49 (0) 172 7480 042

[email protected]

JENS OTTO

Partner

+49 (0) 711 1646-790

+49 (0) 173 7192 739

[email protected]

DR. FRANZ-PETER

STÜMPER

Partner

+49 (0) 711 1646-793

+49 (0) 171 1910 944

[email protected]

Short-time work allowance State aid programme Tax concessions Ensuring business liquidity

DR. DIRK GAUPP

Partner

+49 (0) 711 1646-765

+49 (0) 152 0909 3583

[email protected]

BERND PETER

Director

+49 (0) 711 1646-717

+49 (0) 172 7480 048

[email protected]

CARSTEN LEHBERG

Director

+49 (0) 7141 38 979-54

+49 (0) 151 20317854

[email protected]

N.B.: There are, for several consultation services, grant and/or support options, which we shall be pleased to look at on your behalf.

Agenda

23





ANNEX6


DISCLAIMER7

KUG - Application Procedure

24

1. Notification of a loss of working hours to the local employment office (form KUG 101)

contains information on the number and scale of employees affected, the likely

duration, specification of the type of agreement, reasons for the loss and provision of

suitable evidence of the loss of working hours, as well as confirmation of the fact that

the information provided is true

The 3-month deadline for submission of the application must be complied with. The

KUG is deemed to have been approved on acceptance of the notification.

2. Determination/calculation of the short-time work allowance (KUG 006 form and

calculation table available for downloading online) by the employer

3. Payment of the KUG by the employer

4. Application for the short-time allowance by the business using the corresponding forms

(form KUG 107 and/or KUG 108)

Form for the standard regulation of short-time work within

businesses

ANNEX

Place, Date

Operational uniform scheme for short-time working [SAMPLE]

Dear employees,

due to [the reason for short-time working] it is to be feared for different locations of our company that there will be disruptions in the

work our company.

Therefore, we intend to introduce short work between the xx.yy.zzzz

and the xx.yy.zzzz. It is not yet possible to say to what extent short-time working will be. It may well be impossible to work in the sites and

therefore the work is completely cancelled.

By signing this letter, you agree to the implementation and scope of

short-time working.

Yours sincerely,

[Location, Date, Signature Employer]

I agree:

[Place, Date, Signature Employee 1]



KUG - Basic requirements for employees

25

The employer advances payment of the KUG and is refunded accordingly

Basic requirements for employees personally:

1. Continuation of the employment relationship once the measure has ended

2. Employment relationship that has not been terminated/rescinded

3. KUG is not ruled out under the employment contract

4. No unemployment benefit may be drawn on completion of an advanced training measure

5. No statutory sick pay may be drawn

There is continued entitlement even if the employee becomes sick during the KUG measure and is entitled to the continued payment of his salary under the sick pay scheme.

The Federal Employment Office may place the employee, during the KUG measure, into a second job. If the employee fails to accept this job, he may be disqualified from drawing KUG (period of disqualification of between 3, 6 or 12 weeks).

If the employee fails to follow up the invitations from the Federal Employment Office during the KUG measure, then the KUG claim is suspended for a period of 1 week

ANNEX

Agenda

26





ANNEX6


DISCLAIMER7

Disclaimer

27

DISCLAIMER

This presentation contains an overview of the current, key options. It makes no claim to being complete or fully accurate and , without further, detailed considerations, is not suited to being used as the basis for individual decisions. The presentation is based on the facts and information available at the time of its preparation. Given the current situation, these may change from one day to the next.

bansbach ensuring liquidity in the corona crisis · 2020-04-15 · effectsare still unclear...

Documents