The Federal Court of Justice (Bundesgerichtshof) on 7 May 2015 decided a case (case no. IX ZB 75/14, available here) that is of relevance especially for stakeholders investing and participating in any insolvency plan in one of the possible insolvency procedures under German Law.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2015/07/10/bgh-no-bar-date-in-insolvency-plan-for-later-filed-insolvency-claims/
The Federal Court of Justice (Bundesgerichtshof – “BGH“) on 30 April 2015 decided on a case (case no. IX ZR 301/13, available here) that is of relevance especially for banks and investors who hold security in the form of first/senior ranking land charges (Grundschulden).
The Federal Court of Justice dealt with the question of whether the owner of a junior ranking judgement lien (Zwangssicherungshypothek) is obliged to release this mortgage in order to enable an open market sale of the property, specifically in a case where it is obvious that the owner will not participate in the distribution of proceeds resulting from an auction.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2015/06/24/invitation-to-obstruction-by-junior-ranking-lien-holders/
The European Court of Justice (ECJ) on 16 April 2015 decided on a case that is of enormous relevance for cross-border insolvency proceedings.
The main topic the court ruled on was that Article 13 of Council Regulation (EC) No 1346/2000 of 29 May 2000 on insolvency proceedings (OJ 2000 L 160, p. 1) (the European Insolvency Regulation – “EIR“) must be interpreted as meaning that the defence which it establishes also applies to limitation periods or other time-bars relating to actions to set aside transactions under the law governing the act challenged by the insolvency administrator. With this ruling the case was handed back to the German Federal Court of Justice (Bundesgerichtshof – “BGH“) for the final decision.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2015/06/18/european-court-of-justice-rules-on-cross-border-insolvency-proceedings/
By Peter Jark, Thilo von Bodungen, Silke Goschler and Tom Brägelmann
Retention of title (Eigentumsvorbehalt) is a standard tool in German business for granting security in supply relationships. Usually, it is granted as an extended and/or expanded retention of title (verlängerter bzw. erweiterter Eigentumsvorbehalt). Basically, the supplier receives a revolving security to the delivered movable assets until receipt of all payments under the business relationship. According to a recent decision by the highest German civil court this kind of security may not sufficiently protect the supplier in the context of insolvency proceedings, potentially resulting in the supplier unwittingly being an unsecured creditor.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2015/06/05/clawback-extended-retention-of-title-in-legal-limbo/
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2014/12/17/bgh-de-facto-managing-director-may-be-subject-to-criminal-liability-for-delaying-insolvency-proceedings/
The Federal Court of Justice (BGH, 10 Januar 2013, IX ZR 161/11) ruled that a transaction cannot be challenged pursuant to the provisions concerning incongruent cover (§ 131 (1) German Insolvency Code), if the prior consent of the preliminary insolvency administrator to the aforesaid transaction created a basis of trust vis-à-vis the creditor. This basis of trust is legally binding for the final insolvency administrator.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2014/09/08/challenge-of-performances-with-prior-consent-of-preliminary-insolvency-administrator/
By implementing the Act for Further Facilitation of the Restructuring of Companies in 2012 (so called “ESUG”), companies were supposed to file for insolvency proceedings at a significantly earlier stage than in the past, in particular when the possibility for a turnaround is still available. Furthermore, the change in law was supposed to grant easier access to restructuring measures like the so called “self-administration” (Eigenverwaltung). pursuant to § 270 German Insolvency Act (“InsO”) known as debtor-in-possession proceedings in other jurisdictions. Such self-administration is a regular insolvency proceedings where the debtor remains running the business and administrating its assets under supervision of a trustee, and may be combined with a reorganization plan.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2014/08/11/self-administration-a-restructuring-opportunity-only-for-model-students/
Local Court of Mannheim: No debtor-in-possession for a company whose managing directors that are also shareholders are disunited and quarrelling
Recent Decision by the Local Court of Mannheim
The local court of Mannheim recently published an order, dated 21 February 2014, case no. 4 IN 115/14, NZI 2014, 412, according to which a Debtor’s motion to open an insolvency proceeding as a debtor-in-possession (Eigenverwaltung) proceeding had to be denied because the shareholders of the Debtor, who were also its managing directors, were in disagreement whether there should be a debtor-in-possession proceeding in the first place and how the insolvency could be resolved.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2014/07/07/local-court-of-mannheim-no-debtor-in-possession-for-a-company-whose-managing-directors-that-are-also-shareholders-are-disunited-and-quarrelling/
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2014/07/04/eu-preventive-restructuring-framework-on-the-horizon/
European Court of Justice on competent courts for challenge actions against debtors outside EU (Article 3(1) European Insolvency Regulation)
The European Court of Justice (ECJ, 16.01.2014, Case C-328/12) ruled that the competent court of the opening state is according to Article 3(1) European Insolvency Regulation (“EuInsReg”) also competent regarding an action for challenge against a debtor who has his place of residence in a third country outside the European Union.
Permanent link to this article: http://blogs.dlapiper.com/derestructuring/2014/03/24/european-court-of-justice-on-competent-courts-for-challenge-actions-against-debtors-outside-eu-article-31-european-insolvency-regulation/