Key points
Yet another major amendment to the Insolvency Act has been recently approved by the Czech government and passed to the Chamber of Deputies. The amendment is expected to become legally binding at the beginning of 2017. However, this timing does not allow for any potential obstacles or prolonged proceedings, which are common features of the Czech Parliamentary process.
Revising existing methods for the allocation of insolvency cases
Debt relief procedure
Summary
The German Federal Court has recently examined the treatment of shareholder loans and how these creditor claims are classified in the event of a company’s insolvency (decision by the German Federal Court of Justice (BGH) dated 13 October 2016 (file no. IX ZR 184/14)).
Background
Summary
A recent judgment (German FCJ, 10 September 2015, IX ZR 215/13) deals with the question whether the recipient of a payment may be subject to a clawback claim if he returned the received amount to the debtor before the opening of insolvency proceedings.
Background
Introduction
A recent judgment (German FCJ, 9 June 2016, IX ZR 314/14) relates to the interface between the German master agreement for financial derivative transactions (GMA) and sec. 104 of the German Insolvency Statute (InsO).
Background
Introduction
The German FCJ (IX ZR 143/13, 17 December 2015) relates to the requirements and effects of a settlement between an insolvency administrator and the personally liable partners of an insolvent partnership.
Background
In Germany, corporate entities are not allowed to act as insolvency administrators (sec 56 I 1 Insolvency Code). Instead, the insolvency court selects and appoints experienced individuals.
Background
Pursuant to Sec. 15 para. 1 of the German Insolvency Code (lnsolvenzordnung, lnsO) the managing directors of a company may individually file a request to open insolvency proceedings on behalf of the company, even if they only have joint power of representation together with other managing directors. This special right to file the request on behalf of the company prevails over the general or agreed provisions regarding the power of representation of the directors.
The Rules
(German federal high court – decision of September 24th, 2015 – IX ZR 272/13)
Legal background
In accordance with sec. 166 para 1 German Insolvency Code (“InsO”) an insolvency administrator is entitled to utilise tangible assets in his possession, even where the assets are encumbered.
Although the German Insolvency Code regulates the disposal and utilization of tangible assets and claims encumbered in favour of a creditor no regulation exists for rights such as shares, trademarks or intellectual property rights.
Legal background
Under German criminal law, it is illegal for the management not to fulfil tax obligations when due, whereas under German insolvency law a company must treat all creditors equally when the company is illiquid. By paying taxes after the company becomes illiquid, the management would violate this obligation and prefer the state.