In September 2023, the insolvency administrator of the insolvent Wirecard AG began reclaiming dividend distributions for 2017 and 2018 from shareholders. This is following a judgment of the Federal Court of Justice (BGH) in March 2023 (BGH judgment of March 30, 2023 – IX ZR 121/22). In that judgment the BGH ruled that in the event of a company’s insolvency, the insolvency administrator can demand back dividend payments made to shareholders for up to four years pursuant to section 134 (1) of the Insolvency Code (InsO).

The European Markets in Crypto-Assets Regulation (Regulation (EU) 2023/1114 – MiCA), which entered into force on 29 June 2023, is a significant new regulation that will impact the treatment of cryptocurrencies and digital assets. MiCA requires the European Securities and Markets Authority (ESMA) to develop a series of regulatory technical standards (RTS) and implement technical standards (ITS) and Guidelines. Many of these regulations are to be developed in close cooperation with the European Banking Association (EBA).

The German Federal Government’s various aid measures for employees, self-employed persons, small, medium and large enterprises are suitable for alleviating personal hardships, reducing the economic costs of insolvencies and plant closures and supporting the economy. In addition, it is important that the German Federal Government will play also a constructive role in overcoming the crisis on a European level, to avoid the COVID19 pandemic leading to a European sovereign debt crisis.

The economic fallout from the COVID-19 pandemic will leave in its wake a significant increase in commercial chapter 11 filings. Many of these cases will feature extensive litigation involving breach of contract claims, business interruption insurance disputes, and common law causes of action based on novel interpretations of long-standing legal doctrines such as force majeure.

On March 23, 2020, the German Federal Government (Bundesregierung) published a draft bill to mitigate the consequences of the COVID-19 in civil, insolvency and criminal procedural law.

In this article, we focus on working capital and consider ways a business can seek to weather the storm and preserve all-important liquidity through this challenging period.

Practical Tips

Given the unprecedented challenges presented by COVID-19 globally, what can senior management do in order to manage and mitigate the risk to the company's financial health?

The German Federal Ministry of Justice and Consumer Protection is preparing new legislation suspending the obligation to file for insolvency in order to protect companies that encounter financial difficulties due to the coronavirus crisis (see here).

U.S. Bankruptcy Judge Dennis Montali recently ruled in the Chapter 11 case of Pacific Gas & Electric (“PG&E”) that the Federal Energy Regulatory Commission (“FERC”) has no jurisdiction to interfere with the ability of a bankrupt power utility company to reject power purchase agreements (“PPAs”).

The Supreme Court this week resolved a long-standing open issue regarding the treatment of trademark license rights in bankruptcy proceedings. The Court ruled in favor of Mission Products, a licensee under a trademark license agreement that had been rejected in the chapter 11 case of Tempnology, the debtor-licensor, determining that the rejection constituted a breach of the agreement but did not rescind it.

Few issues in bankruptcy create as much contention as disputes regarding the right of setoff. This was recently highlighted by a decision in the chapter 11 case of Orexigen Therapeutics in the District of Delaware.