We summarise the background and outcomes of Case C-73/20 – Oeltrans, an important ruling for liquidators faced with the avoidance of a third party payment and a conflict of laws.
The facts
The UK's withdrawal from the European Union has created uncertainty around insolvency law. Let's look at how things have changed in the wake of Brexit, and what that means for current and future German insolvency proceedings.
What is the state of play post-transition period?
According to German law, managing directors of limited liability companies are personally liable for payments made despite insolvency. Directors may even be liable when third parties make payments to the insolvent company's current account that has a negative balance because such payment will constitute a payment by the insolvent company to the bank
Background
According to German law, managing directors of limited liability companies are personally liable for payments that have been made despite insolvency. This can lead to widespread liability.
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