The Federal Labour Court (Bundesarbeitsgericht – BAG) has ruled on 18 May 2021 (docket number 3 AZR 317/20) that in the case of the PSV’s assertion of claims against the insolvency administrator of an insolvent company, it is not the balance sheet interest rate used for the calculation of the pension provisions that is applicable, but the standard statutory interest rate according to section 246 German Civil Code (BGB). Only this interest rate is decisive for the calculation of the amount of claims.
Facts / Background:
The PSV as plaintiff and the insolvency administrator as defendant were in dispute about the amount of the applicable discount rate regarding the calculation of pension claims (capitalisation) which the PSV had to assume due to the insolvency and for which it claims as an insolvency creditor against the insolvency administrator. In October 2017, insolvency proceedings were opened against the former employer. The subject of these proceedings were, among other things, occupational pension claims. The PSV had to assume the pensions liabilities/obligations by law and was therefore entitled to file a corresponding claim against the insolvency administrator. In its actuarial calculation of the amount of this claim, the PSV applied the balance sheet discount rate pursuant to section 253 of the German Commercial Code (HGB), which was 3.74% for October 2017. The insolvency administrator (as defendant) had accepted the claim on the merits, but disputed the amount calculated by the PSV. According to the insolvency administrator, a higher discount rate must be used for the calculation, namely 4%. This would result in a lower amount that could be claimed by the PSV. The insolvency administrator argued that the German Insolvency Code (Insolvenzordnung) refers to the standard discount rate according Section 246 German Civil Code, and that there were no indications stating that the balance sheet discount rate pursuant to section 253 of the German Commercial Code would be applicable.
The Federal Labour Court agreed with the insolvency administrator’s view according to which the standard discount rate pursuant to section 246 of the German Civil Code was decisive. This resulted from an interpretation of various provisions of the German Insolvency Code. There is no recognizable reason not to regard the interest rate under section 246 as the generally applicable discount rate for the German insolvency code. The application of a uniform discount rate in the context of insolvency proceedings – namely pursuant to section 246 of the Civil Code – is also necessary in order to comply with the principle of equal satisfaction of creditors or equal treatment of creditors laid down in the German Insolvency Code; Advantages from applying a more favorable discount rate would not be justified.
The decision is to be welcomed, as it leads to legal certainty and prevents other creditors from being disadvantaged. Against the background of a steadily decreasing balance sheet discount rate (pursuant to 253 HGB), this applies all the more.