Introduction The number of financial institutions that have announced the relocation of their EU headquarters from the UK to Germany has increased during the last weeks. In the meantime, some of the largest US and Asian institutions have confirmed their plans to expand their operations in Germany, and we expect others to follow soon. How can we assist? This briefing shall provide you with an overview of a number of issues that may be of interest for your decision to expand your operations in Germany.
Welche Folgen hat die Entscheidung für abgeschlossene Verfahren? Was bedeutet sie für die Zukunft?
Overview
In November 2015, the German legislator passed the Resolution Mechanism Act (Abwicklungsmechanismusgesetz, AbwMechG). The law introduces, among other things, Section 46f (5) et seqq. of the German Banking Act (Kreditwesengesetz, KWG), which requires that claims under certain unsecured debt instruments be subordinated to general senior unsecured obligations in an insolvency proceeding involving a German bank.
The German parliament (Deutscher Bundestag) has recently passed a law on the restructuring and dissolution of distressed financial institutions, establishing a sector-wide restructuring fund and extending the statute of limitations for the liability board members (Restructuring Act).
the recent equitable life case, decided by the higher regional court of celle (the olg celle), is the first example of a german court considering the recognition of a uk creditors' scheme of arrangement.
The COVID-19 pandemic in Germany is significantly affecting commercial landlords and tenants. The German legislator has taken various measures to mitigate the consequences of officially ordered business closures during lockdown and other pandemic-related adverse effects.
Over the last 12 months, global markets have been amazingly resilient, indeed even buoyant, aided in large part by governments around Europe and the world providing seemingly unlimited funding and extensive financial stabilisation measures, such as quantitative easing.
This, coupled with protective legislation for companies to prevent insolvency filings and to ensure continued trading – for example, moratoriums, relaxations on insolvency filing obligations and restrictions on creditor actions – has given businesses significant breathing space and prevented widespread failures.
On 17 December 2020 the German Parliament has passed the rules on the further development of the German restructuring and insolvency law and it will now enter into force on 1 January 2021. An essential part of the law is the introduction of a corporate stabilisation and restructuring regime, which establishes a legal framework for out-of-court restructurings in Germany on the basis of the EU Restructuring Directive of 20 June 2019 (Directive (EU) 2019/1023) (the Preventive Restructuring Framework).
Where restructuring measures comprising collective redundancies become necessary, the employer must fulfil a number of legal requirements to successfully implement such measures. While it is sometimes tempting to implement the necessary restructuring in a way that ignores the various legal requirements (e.g. co-determination of the works council etc.), there are only exceptional situations in which such a way does not lead to a total failure of the original plan.
Germany's major legal reform aiming to facilitate group insolvencies comes into effect on April 21, 2018 (full German text). The new law allows insolvency proceedings over companies within a corporate group to be concentrated at a single German insolvency court and/or to be administered by one insolvency administrator.