Summary

In May 2017, the German Federal Supreme Court (Bundesgerichtshof), Az. XI ZR 571/15, has given its views for the first time on bridging loans (Überbrückungskredite) and their validity in a restructuring scenario.

The NSW Supreme Court has given a Landlord leave to commence proceedings against a company for rent and make good costs arising after the date of the DOCA.

BACKGROUND

This week’s TGIF examines a recent decision of the Supreme Court of New South Wales which considered whether payments made by a third party to a company’s creditors could be recovered as unfair preferences.

What happened?

On 2 September 2015, liquidators were appointed to a building and construction company (the Company) and later commenced proceedings against eight defendants for the recovery of payments considered to be unfair preferences.

Summary

The German Federal Court of Finance (BFH) has recently decided on the tax treatment of profits resulting from debt waived in the course of a company´s restructuring (case file no. GrS 1/15, 28 November 2016).

The BFH:

Summary

The German Federal Court has recently examined the treatment of shareholder loans and how these creditor claims are classified in the event of a company’s insolvency (decision by the German Federal Court of Justice (BGH) dated 13 October 2016 (file no. IX ZR 184/14)).

Background

This week’s TGIF considers a NSW Court of Appeal decision which confirms that liquidators who bring a claim for preference payments within the limitation period may amend that claim to capture additional transactions otherwise subject to a statutory bar.

Background

Sydney Recycling Park (SRP) provided “tipping services” to Cardinal Group (Cardinal), who were in the business of “waste management”. Cardinal ran into some financial difficulties and on 1 February 2012, it was placed into liquidation.

This week’s TGIF considers the recent decision of Hastie Group Ltd (in liq) v Moore [2016] NSWCA 305 in which the Court held that privilege attached to an expert report prepared for the purpose of obtaining litigation funding.

WHAT HAPPENED?

Background

Pursuant to Sec. 15 para. 1 of the German Insolvency Code (lnsolvenzordnung, lnsO) the managing directors of a company may individually file a request to open insolvency proceedings on behalf of the company, even if they only have joint power of representation together with other managing directors. This special right to file the request on behalf of the company prevails over the general or agreed provisions regarding the power of representation of the directors.

The Rules

Based on a referral by the German Federal Court of Justice (BGH) the ECJ held that provisions such as § 64 of the German Limited Liability Companies Act (GmbHG) which regulates the personal liability of German GmbH directors in cases of insolvency, can be regarded as an insolvency law rule by virtue of Art. 4 para. 1 European Insolvency Regulation. The provision can therefore be applicable to a UK limited company (having its centre of main interest in Germany) and its director respectively, in accordance with European law: according to Art. 4 para.

Minor instalment payments alone – also in the event of late payments – may not be sufficient to trigger knowledge of the debtor’s imminent illiquidity within the meaning of section 133 German Insolvency Act

Overview