The case concerned royalty payments, which a creditor had a contractual right to receive, arising from iron ore produced at a mine in Sierra Leone.
Background
The case concerned royalty payments, which a creditor had a contractual right to receive, arising from iron ore produced at a mine in Sierra Leone.
The parent company of the Sierra Leonean mining company went into administration and administrators from PwC were appointed. The creditor's director called the administrators to stress the importance of bringing the royalty payments to the attention of a third party purchaser.
The administrators subsequently sold the mine, but did not make the purchaser aware of the royalty issue.
Background
Under German law, when a company becomes insolvent or over-indebted, its directors are obliged to file for insolvency. If they fail to fulfil this duty, according to s 64 German limited liability company Act (GmbHG) from this point in time onwards, they have to compensate the company for those payments which (objectively) would not have been made by a prudent businessman. Such imprudence is presumed.
In practice, s 64 is one of the most powerful tools available to insolvency administrators claiming against directors.
The reform of the European insolvency regulation (EIR) comes into force in mid-2017. Inter alia, it will alter the rules on which jurisdiction is competent to open insolvency procedures.
Legal Background
If a debtor needs to file for insolvency, there are two main ways of manipulating the existing legal competence rules:
Summary
A recent judgment (German FCJ, 10 September 2015, IX ZR 215/13) deals with the question whether the recipient of a payment may be subject to a clawback claim if he returned the received amount to the debtor before the opening of insolvency proceedings.
Background
Introduction
The German FCJ (IX ZR 143/13, 17 December 2015) relates to the requirements and effects of a settlement between an insolvency administrator and the personally liable partners of an insolvent partnership.
Introduction
A recent judgment (German FCJ, 9 June 2016, IX ZR 314/14) relates to the interface between the German master agreement for financial derivative transactions (GMA) and sec. 104 of the German Insolvency Statute (InsO).
Background
Background
In Germany, corporate entities are not allowed to act as insolvency administrators (sec 56 I 1 Insolvency Code). Instead, the insolvency court selects and appoints experienced individuals.
Legal background
Under German criminal law, it is illegal for the management not to fulfil tax obligations when due, whereas under German insolvency law a company must treat all creditors equally when the company is illiquid. By paying taxes after the company becomes illiquid, the management would violate this obligation and prefer the state.
Legal background
Council Regulation (EC) No 1346/2000 concerns insolvency proceedings with debtors which operate cross-border in the EU.
Broadly, the law applicable to insolvency proceedings is the law of the member state in which the insolvency proceedings are opened. This includes rules relating to the voidness, voidability or unenforceability of legal acts which are detrimental to all creditors; article 4.