The German Federal Supreme Court (Bundesgerichtshof) recently held that creditors cannot bring claims against the Hellenic Republic before the German courts in the context of Greece's debt restructuring in 2012 , finding that Greece enjoys immunity from jurisdiction before the German courts (decision of 8 March 2016; docket number VI ZR 516/14).

Background and facts

Key points

The ‘qualified subordination’ tool is a useful device for a German company that may be balance-sheet insolvent.

Background

German insolvency law requires the directors of a company to file for insolvency when the company is over-indebted pursuant to sec. 19 German Insolvency Code (‘InsO’). The failure to comply with this obligation is a criminal offence, and can also trigger directors’ liabilities under German corporate law.

‘Qualified Subordination’

Directors of English companies that entered into insolvency proceedings in Germany could be liable to reimburse the company under German law for payments made after the company became insolvent.

(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.

On 12 February 2016, the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, orBaFin) declared Maple Bank GmbH (“Maple”) as an indemnification case, meaning that the German deposit insurance institutions can compensate the bank’s creditors.

BaFin had previously filed an insolvency petition against Maple, and the insolvency court in Frankfurt am Main opened insolvency proceedings on 11 February 2016. It appointed an insolvency administrator who is now responsible for managing Maple’s affairs.

Maple Bank GmbH (“Maple”) has operated in Frankfurt, Germany since 1994. The bank acted in the business areas of equity and fixed income trading, repos and securities lending, deposits, structured products and institutional sales. Maple has branches in Germany, Netherlands and Canada and subsidiaries in U.S., U.K. and the Cayman islands. It is part of the Maple Financial Group Inc., a privately held, global financial organisation based in Canada.

Essentie                                                                                               

On February 24, 2016, the legal committee (Rechtsausschuss) of the German parliament (Bundestag) held a hearing on the proposed reform to considerably limit the clawback regime (Insolvenzanfechtung) in the German insolvency code (Insolvenzordnung – InsO). The general gist of hearing was that the current German governing party coalition is still determined to enact the reform, with some modifications as to the scope and protected parties still up for discussion.

Einleitung

Introduction