Background
Under German law, when a company becomes insolvent or over-indebted, its directors are obliged to file for insolvency. If they fail to fulfil this duty, according to s 64 German limited liability company Act (GmbHG) from this point in time onwards, they have to compensate the company for those payments which (objectively) would not have been made by a prudent businessman. Such imprudence is presumed.
In practice, s 64 is one of the most powerful tools available to insolvency administrators claiming against directors.
The reform of the European insolvency regulation (EIR) comes into force in mid-2017. Inter alia, it will alter the rules on which jurisdiction is competent to open insolvency procedures.
Legal Background
If a debtor needs to file for insolvency, there are two main ways of manipulating the existing legal competence rules:
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
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.
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
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.
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.
Key point
An assignee of future debts was bound by discounting and rebate arrangements concluded between the assignor and its customers despite having given notice of the assignment.
The facts
M supplied goods to customers. It factored its debts to Bibby in 2000. The Factoring Agreement provided that all future debts due to M by customers were to vest upon their creation in Bibby.
Bibby did the following to try and protect its position – ultimately the steps proved unsuccessful:
Legal background
Council Regulation (EC) No 1346/2000 concerns insolvency proceedings with debtors which operate cross-border in the EU.
Broadly, the law applicable to insolvency proceedings is the law of the member state in which the insolvency proceedings are opened. This includes rules relating to the voidness, voidability or unenforceability of legal acts which are detrimental to all creditors; article 4.
There have been a couple of cases in the last few months where the impact of changes to the details of the various registers at Companies House has been considered by a Court. This article considers the points of interest for lenders that arise out of those decisions
What use is an LP registration certificate?
Not much in the case of a certificate that relates to a limited partnership (one to which the Limited Partnership Act 1907 applies not the limited liability partnership variety).