The German event industry, once the backbone of the nation’s cultural and corporate gatherings, finds itself navigating a precarious financial landscape as the grace period for pandemic-era subsidies comes to an abrupt end. During the height of the COVID-19 pandemic, the federal government deployed a multi-billion euro safety net to prevent the collapse of thousands of service providers, venues, and agencies. These "Corona-Wirtschaftshilfen," which included the Bridging Aid (Überbrückungshilfe) phases I through IV as well as the specialized November and December 2020 grants, were instrumental in keeping the lights on. However, as of early 2025, the administrative honeymoon is over. A wave of repayment demands is now hitting the desks of event organizers, many of whom are ill-prepared to return the liquidity that was long ago absorbed by operational overheads.
The current crisis stems from the transition from provisional grants to final assessments. Most aid was distributed based on forecasted revenue losses and estimated fixed costs. To finalize these payments, companies were required to submit a "Schlussabrechnung" (final accounting) via professional intermediaries such as tax advisors or auditors. With the submission deadlines now passed, the authorities have moved into the enforcement phase. For many in the event sector, this transition from "recipient" to "debtor" represents a systemic threat that could lead to a delayed wave of insolvencies nearly five years after the initial lockdowns began.
A Chronology of Support and Accountability
The timeline of the German government’s financial intervention reflects the unprecedented nature of the pandemic. In early 2020, as mass gatherings were banned, the federal government launched the first "Soforthilfe" (Emergency Aid). This was followed by more structured programs:
- June 2020 – December 2020: Introduction of Überbrückungshilfe I and II, focusing on SMEs with significant revenue drops.
- November/December 2020: The "Novemberhilfe" and "Dezemberhilfe" provided up to 75% of comparable 2019 revenues for businesses directly forced to close.
- January 2021 – June 2022: Überbrückungshilfe III, III Plus, and IV provided expanded support for fixed costs, including specialized provisions for the culture and event industry (e.g., "Ausfallschutz" for canceled events).
- 2023 – Mid-2024: The "Schlussabrechnung" period. Companies were required to reconcile their actual figures with their initial estimates.
- January 2025: The issuance of "Schlussbescheide" (final notices) by state-level granting authorities, often resulting in significant repayment demands.
Legal experts Dr. Susann Brackmann and Philipp von dem Bussche of the law firm CMS Deutschland note that the event industry is particularly vulnerable because its recovery was slower than other sectors. While retail and domestic tourism bounced back relatively quickly, the high-lead-time nature of large-scale trade fairs and international conferences meant that many event firms only reached pre-pandemic stability in late 2023. Consequently, the capital required for repayments has often not been replenished.
The Final Accounting Trap: Failure to Comply
One of the most severe risks currently facing the industry is the total forfeiture of aid due to administrative non-compliance. Companies that failed to submit their final accounting by the designated deadlines are now being issued notices requiring the 100% repayment of all received funds. In the eyes of the granting authorities, the failure to submit documentation is treated as a breach of the subsidy conditions, rendering the entire amount an "unjust enrichment."
For a medium-sized event technology provider that may have received €500,000 across various aid phases, a demand for full repayment within a 30-day window is catastrophic. Industry data suggests that a significant minority of firms missed these deadlines, often due to the high cost of professional tax advice, the departure of key administrative staff, or a simple misunderstanding of the mandatory nature of the final reconciliation. Once a final notice for full repayment is issued, the legal avenues for appeal are narrow, and the obligation to pay is immediate.
Discrepancies and the "Subsidized" Revenue Gap
Even for those who complied with all filing requirements, the threat of repayment remains high. During the pandemic, the urgency of the situation led many firms to over-estimate their fixed costs or under-estimate the speed of their partial recovery. Common points of contention in the final audits include:
- Revenue Recognition: Shifts in when revenue was booked versus when services were rendered can move a company out of the eligibility bracket for specific months.
- Fixed Cost Eligibility: Authorities have narrowed the definition of "eligible fixed costs" in the years since the funds were disbursed. Costs that were initially thought to be covered—such as certain personnel expenses or specific maintenance costs for event equipment—are being retroactively disqualified.
- Affiliated Companies: The "Verbundunternehmen" (affiliated companies) rule has proven to be a minefield. If multiple entities are owned by the same parent, their revenue is aggregated, often pushing the group above the aid thresholds or reducing the total grant amount allowed.
Where discrepancies are found, the resulting "Rückforderungsbescheid" (repayment notice) typically allows for a one-month payment window. While deferrals (Stundungen) of up to three years are theoretically possible, they require rigorous justification and are granted at the discretion of the state authorities.
The Legal Thresholds of Insolvency: §§ 17, 18, and 19 InsO
The influx of repayment demands forces management teams to confront the strict realities of German insolvency law. The German Insolvency Code (Insolvenzordnung – InsO) defines three primary triggers for insolvency, all of which are relevant in the context of COVID aid clawbacks.
Illiquidity (§ 17 InsO): This occurs when a company cannot meet 90% or more of its due payment obligations within a three-week window. A large repayment demand from the state can instantly trigger this condition.
Imminent Illiquidity (§ 18 InsO): This is a forward-looking metric. If a company’s financial planning shows that it will likely be unable to meet its obligations within the next 24 months, it is considered "imminently illiquid." While this does not always mandate an immediate filing for corporations, it serves as a critical warning sign that requires restructuring.
Over-indebtedness (§ 19 InsO): For capital companies (like a GmbH), over-indebtedness occurs when the company’s assets no longer cover its liabilities, unless the continuation of the business is "highly likely" over the next 12 months (a positive going-concern forecast). A massive repayment liability on the balance sheet can turn a company’s equity negative, making a positive forecast difficult to justify.
Strategic Restructuring and the StaRUG Framework
To avoid the stigma and loss of control associated with traditional insolvency, companies are increasingly looking toward the Corporate Stabilization and Restructuring Act (StaRUG). Introduced in early 2021, StaRUG provides a "pre-insolvency" toolkit that allows businesses to restructure their debts without a full court process, provided they are not yet fully illiquid.
Under StaRUG, a company can propose a restructuring plan to its creditors. If a 75% majority (by value) of the affected creditor groups agrees, the plan can be legally enforced, even against dissenting creditors. In the context of COVID aid, this could involve negotiating a "haircut" (partial debt forgiveness) or a significant extension of payment terms with the state and other creditors. However, the window to use StaRUG is narrow; it is only available during the "imminent illiquidity" phase (§ 18 InsO). Once a company is fully illiquid (§ 17) or over-indebted (§ 19), the path to StaRUG is blocked, and traditional insolvency becomes mandatory.
Management Liability and the Duty of Care
For the managing directors (Geschäftsführer) of event agencies and venue operators, the current climate is fraught with personal risk. Under German law, management has a "duty of care" to monitor the company’s solvency constantly. Failure to file for insolvency within the statutory periods—three weeks for illiquidity and six weeks for over-indebtedness—can lead to personal civil liability and even criminal prosecution for "Insolvenzverschleppung" (delaying insolvency).
Furthermore, payments made to other creditors after the company has technically reached a state of insolvency can be clawed back by an insolvency administrator, and the directors may be held personally liable for those amounts. This makes the "proactive crisis management" advised by CMS experts not just a business strategy, but a necessary legal shield for individuals in leadership roles.
Broader Economic Implications for the Event Sector
The potential for a "domino effect" in the event industry is significant. The sector is characterized by a complex web of subcontractors. If a major event agency is forced into insolvency due to a €1 million aid repayment, its failure ripples down to the freelance technicians, catering firms, and equipment rental houses that rely on its contracts.
Industry associations have expressed concern that the rigid enforcement of repayments ignores the unique economic "long tail" of the pandemic’s impact on live events. Unlike a restaurant that can increase prices or turn over tables faster, event organizers are often locked into multi-year contracts with fixed pricing, leaving little room to absorb sudden six-figure liabilities.
Conclusion and Recommended Action
The landscape of 2025 demands a shift from operational recovery to financial fortification. For businesses in the event industry, the "Corona-Wirtschaftshilfen" have transitioned from a lifeline to a potential liability. The experts at CMS Deutschland emphasize that the worst strategy is a "wait and see" approach.
Affected companies must immediately undertake a detailed 24-month liquidity plan. If a repayment notice arrives, it should be subjected to a rigorous legal audit to ensure the authorities have applied the current (and often complex) guidelines correctly. If the financial burden appears insurmountable, exploring restructuring tools like StaRUG early—while the company still has the "maneuvering room" of imminent rather than actual illiquidity—may be the only way to preserve the business for the long term. The event industry has survived the silence of the lockdowns; now, it must survive the cost of that survival.
