As we reported in a previous blog the German legislator in November 2022 introduced the Law on the Temporary Adaption of Restructuring and Insolvency Law Provisions to Mitigate the Consequences of the Crisis (SanInsKG). This addressed the difficulty of companies assessing their solvency during the crisis at that time, in particular as a result of … Continue Reading
The Law on the Temporary Adaption of Restructuring and Insolvency Law Provisions to Mitigate the Consequences of the Crisis (SanInsKG) was published in the German Federal Gazette (Bundesanzeiger) today (8 November 2022) and will become effective in German law tomorrow (9 November 2022), following a very quick legislative process. Purpose of the SanInsKG SanInsKG is … Continue Reading
After its publication in the German Federal Gazette (Bundesanzeiger) on 29 December 2020, the Law for the Further Development of the Restructuring and Insolvency Laws (SanInsFoG) came into force in Germany on 1 January 2021. The major part of this new law, the Law on the Stabilisation and Restructuring Framework for Enterprises (StaRUG), introduces a … Continue Reading
This quick guide summarises the duties that directors of German companies are subject to and how those duties change when the company is insolvent or at risk of being insolvent. It also gives an overview of the personal risk to directors when the company is in financial difficulty and suggests some practical tips to help … Continue Reading
On 12 March 2018 the European Commission published a proposal for a Regulation to govern the law applicable to the third-party effects of assignments of claims (the “Assignment Regulation”). The proposal of the Assignment Regulation adopted by the European Commission deals with which law applies to determine the effectiveness and perfection of the transfer of … Continue Reading
In Germany, securitization SPVs, factoring companies and asset based lenders take security over the leased assets owned by the leasing company by way of a security transfer of title. However, in all cases of a leasing company’s insolvency where the leasing company has still possession of the assets, the owner of the security in the … Continue Reading
Under German law, there are strict legal obligations for the managing directors of an insolvent company to file for insolvency. Failure to comply exposes a managing director to civil and criminal liability. It is therefore important for managing directors to know how to test whether their company is insolvent. One of the legal reasons for insolvency … Continue Reading
A recent ruling of the German Federal Civil Court (Bundesgerichtshof (“BGH”)) is a reminder of the risks which shareholders of a German company can face in an insolvency of their German subsidiary. Under the German Insolvency Code (“InsO”), claims for repayment of a loan granted by a shareholder who holds more than 10% of the … Continue Reading
German insolvency laws are very strict. The management of an insolvent company is under strict obligations to file for insolvency, and failure to comply with such obligation may result in civil and criminal liability. Other stakeholders, like financing banks or suppliers, who are dealing with a distressed company, require documentation that their contract partner can … Continue Reading
On 5 April 2017, an amendment to the German Insolvency Code (Insolvenzordnung – “InsO”) has come into force which provides for various changes to the avoidance rules and clawback laws in German insolvency proceedings. The major change affects the right of an insolvency administrator to challenge transactions for willful disadvantage (§ 133 InsO).… Continue Reading
The question whether restructuring profits are taxable or not has been answered differently in Germany in the past. However, on 7 February 2017, a decision of the Grand Senate of the Federal Fiscal Court (the “FFC Decision”) was published, in which the highest German tax court declared the Restructuring Decree as unlawful. The FFC found that … Continue Reading
While the number of corporate insolvencies in Germany has declined over the last couple of years, the general market perception is that the number of insolvencies may increase again in 2017. Also, as more larger companies are facing distressed situations, the overall value of distressed debt is therefore expected to rise as well. The legal … Continue Reading
According to the European Commission, every year in the EU, 200,000 firms go bankrupt, resulting in over 1.7 million people losing their jobs. Currently, too many viable companies in financial difficulties are steered towards liquidation rather than early restructuring. Also, too few entrepreneurs get a second chance. In order to improve this situation, yesterday the … Continue Reading
The statistics show that over 10,000 English limited companies operate in Germany. The company is registered in the Companies Register in the UK, but has a branch active in Germany, which is registered in German Company registries. On 10 December 2015 the Court of Justice of the European Union (ECJ) decided on the question whether … Continue Reading
Previous posts have explained some aspects of the ROT concept in Germany (Part 1, Part 2, Part 3). Now it is time to consider how ROT actually works in the insolvency of a German customer. The most important point in this respect is that the potential protection granted by ROT does not work automatically. Instead, action … Continue Reading
Cathryn Williams, Andreas Lehmann and Antoine Adeline have written an article for the Journal of Corporate Renewal in its May 2015 issue entitled “EU Retailers’ Struggles Continue Amid Signs of Improvement.” Click here to read the article.… Continue Reading
On April 16, 2015, the European Court of Justice (“ECJ”) provided guidance on the interpretation of Article 13 of the EC Regulation on Insolvency Proceedings (the “Regulation”) in the case Lutz v Bäuerle – C-557/13. Pursuant to Article 4.2 of the Regulation, the general rule is that the law of the Member State where the insolvency proceedings … Continue Reading
This post addresses the question of how retention of title (“ROT”) provisions are effectively agreed to as part of the contractual relationship between a supplier and its German customer under German law. In previous posts, we have introduced the general concept of ROT provisions as a means to protect suppliers when they are creditors in the insolvency … Continue Reading
A previous post introduced the general concept of ROT provisions as a means to protect suppliers as creditors in the insolvency of their customers. The basic principle of ROT under German law is that the supplier remains the owner of the goods which it has supplied to its customer until the customer has fully paid … Continue Reading
In a Cross-Jurisdictional review of distressed loan sales in US, France, Germany and Spain, Squire Patton Boggs’ insolvency/restructuring lawyers from each of these jurisdictions give a high-level overview of both economic and legal market trends and how certain key legal issues are being addressed by their local insolvency regimes. They look at: Who is selling … Continue Reading
Foreign suppliers are often not familiar with the legal framework applying in an insolvency of their German customers. That lack of familiarity may leave them ill-prepared to deal with distressed customers. In many cases, the foreign suppliers have not taken the measures necessary to protect themselves. I plan to provide readers throughout the following months, … Continue Reading