Andreas Lehmann

Subscribe to all posts by Andreas Lehmann

Germany’s Insolvency Code Amended In Light of Current Economic Crisis

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

Germany Implements New Insolvency Laws and Restructuring Tools

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

Directors’ Duties – A Guide for German Businesses

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

Future EU Regulation proposed to address conflicts of law on the assignment of receivables

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

German Federal Civil Court strengthens Leasing Receivables Securitisation, Factoring and Asset Based Lending in the Lessor’s Insolvency

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

German Court rejects the “bow wave theory” (“Bugwellentheorie”) in test for company illiquidity

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

Parent guarantees in the insolvency of a German subsidiary – claw back risks

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

Hope for easier restructuring of SMEs: German Institute of Public Auditors propose new standard Restructuring Opinions

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

Insolvencies in Germany – New Avoidance Law in Force

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

Taxation of restructuring profits – a new and unexpected obstacle for restructurings in Germany

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

Early Restructuring and a Second Chance for Entrepreneurs – EU Commission proposes new Restructuring Directive

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

Retention of Title (ROT) Agreements as a Creditor Protection Against Insolvent German Customers — Part 4

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

European Court of Justice Rules on Applicable Law in Cross-border Clawback Proceedings

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

Retention of Title Agreements as Creditor Protection Against Insolvent German Customers – Part 3

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

Trends in Distressed Loan Sales in US and Europe

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

Retention of Title (ROT) Agreements as a Creditor Protection Against Insolvent German Customers

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
LexBlog