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 Berryman v Zurich Australia Ltd [2016] WASC 196 it was decided that a bankrupt's entitlement to claim a TPD benefit under a life insurance policy is not an entitlement that is divisible amongst the bankrupt's creditors, and therefore such an entitlement does not vest in the Official Trustee in bankruptcy. Tottle J of the Supreme Court of Western Australia ruled that the bankrupt insured could continue an action in his own name to recover the TPD benefit. Life insurers may need to adjust their claims' payment practices in light of the Berryman decision.

The statistics show that over 10,000 English limited companies operate in Germany. The company is registered in the Companies Register in the UK, but has a branch active in Germany, which is registered in German Company registries. On 10 December 2015 the Court of Justice of the European Union (ECJ) decided on the question whether the liability of the director of English registered Kornhaas Montage und Dienstleistung Ltd (‘KMD’), which was subjected to German insolvency proceedings, should be determined by English law or by German law.

Previous posts have explained some aspects of the ROT concept in Germany (Part 1, Part 2, 

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.

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.

A previous post introduced the general concept of ROT provisions as a means to protect suppliers as creditors in the insolvency of their customers. The basic principle of ROT under German law is that the supplier remains the owner of the goods which it has supplied to its customer until the customer has fully paid the purchase price for the goods.

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, with information that suppliers may find helpful to better protect their position in case of an insolvency of their German customer. Questions and comments are welcome!

On 23 February 2011, the Federal Government (Bundeskabinett) adopted the government draft (Regierungsentwurf) of an act (Entwurf eines Gesetzes zur weiteren Erleichterung der Sanierung von Unternehmen) that proposes material changes to the German Insolvency Act (Insolvenzordnung). The government's aim is to modify the economic terms for the restructuring of distressed companies .

The German Federal Civil Court (BGH) in its decision of 15 April 2010 (IX ZR 188/09) clarified the legal position of holders of preferred stock in insolvency plan proceedings.