The German Federal Court of Justice was recently asked to decide whether a waiver in favour of company director had been validated by the preliminary insolvency administrator's consent.

Background

(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.

Key point

The Court is prepared to look at the overall nature of a directors conduct and dissect a complex series of transactions before concluding what (if any) insolvency failings have been committed by a director.

The Facts

Key points

The court has discretion to allow an insolvency practitioner to recover fees and costs from work done in realising assets for the benefit of a third party but it cannot be exercised where an insolvency practitioner takes action in relation to assets outside in the insolvency estate of his own accord.

The facts

Key Point

No recognition order was made where the main foreign insolvency proceedings had ended even where the plan agreed in those proceedings was in part still to be implemented.

The Facts

Key Point

An "establishment" requires business and business activity to be carried out involving dealings with third parties and not simply acts of internal administration.

Facts

Key point

Pensions in payment were within the ambit of section 310(7) of the Insolvency Act 1986 (the "Act"), but pensions not in payment were not payments to which a bankrupt was “entitled” as the right to draw had not been excerised. The court therefore refused to make an income payments order ("IPO").

The Facts

Key points

• Where main proceedings have been opened in one member state, secondary proceedings may be opened in another member state where the debtor has an establishment. The effects of the secondary proceedings shall be restricted to the assets in that territory.  
• Local law and court discretion may apply to the opening of secondary proceedings and may be exercised, but these should not be discriminatory.

The Facts

Key points

Agreements relating to costs in the course of their office could not be set aside by liquidators subsequently appointed.

The facts

Key points

The court has jurisdiction to order the UK Registrar of Companies to replace previously filed administrators' proposals.

The Facts

The administrators of a company filed a statement of proposals with the Registrar but then sought to replace the proposals because they contained information that the company was obliged to keep confidential. The administrators argued that: