In vielen Branchen kann die Lieferkette eine Vielzahl von Unternehmen und Jurisdiktionen umfassen. Im derzeitigen Wirtschaftsklima ist es nicht ungewöhnlich, dass einzelne Lieferanten innerhalb dieser Lieferkette in finanzielle   Schwierigkeiten   geraten   oder ein Insolvenzverfahren beantragen.

In many industries, the supply chain can involve multiple suppliers and jurisdictions. In the current economic climate, it is not unusual for a supplier within the supply chain to encounter financial distress or even to enter into formal insolvency proceedings. This can have a significant impact on a company if its business depends on a distressed supplier and an alternative or additional supplier cannot be found (and production cannot be brought in house) or an alternative sourcing is not possible for other reasons, like part/raw material approval process, testing, customs etc.

With the Act on the Temporary Suspension of the Insolvency Filing Obligation Due to Heavy Rainfall and Floods in July 2021 (Gesetz zur vorübergehenden Aussetzung der Insolvenzantragspflicht wegen Starkregenfällen und Hochwassern im Juli 2021), which is part of the Reconstruction Assistance Act 2021 (Aufbauhilfegesetzes 2021), the German Federal Parliament and the German Federal Council have decided to suspend the obligation to file for insolvency retroactively as of 10 July 2021.

I. Introduction

Due to the current corona crisis and the therewith associated tense economic situation, many managing directors (Geschäftsführer) are faced with the question of a possible, punitive obligation to file for insolvency as well as other duties that must be observed in the context of a crisis.

The following provides an overview of the obligation to file for insolvency, payment prohibitions in a crisis as well as the facilitations introduced under the German COVID-19 legislation.

With unanimous vote, the German Parliament passed the Law to mitigate the consequences of the COVID-19 pandemic in civil, criminal and insolvency law. This new law brings with it several (temporary) changes of law all of which aim at mitigating the consequences of the COVID-19 pandemic in both private and business life. Inter alia, the following provisions have been implemented:

1. Suspension of the obligation to file for insolvency

On Monday, 16 March 2020, the German Federal Ministry of Justice and Consumer Protection (Bundesministerium der Justiz und für Verbraucherschutz) announced that they are working on a legislative provision according to which the obligation to file for insolvency within three weeks following the occurrence of a reason for insolvency (i.e. illiquidity or over-indebtedness) would be suspended for such entities which face liquidity issues due to the Corona (COVID-19) pandemic.

This week’s TGIF takes a look at the recent case of Mills Oakley (a partnership) v Asset HQ Australia Pty Ltd [2019] VSC 98, where the Supreme Court of Victoria found the statutory presumption of insolvency did not arise as there had not been effective service of a statutory demand due to a typographical error in the postal address.

What happened?

This week’s TGIF examines a decision of the Victorian Supreme Court which found that several proofs had been wrongly admitted or rejected, and had correct decisions been made, the company would not have been put into liquidation.

BACKGROUND

This week’s TGIF considers Re Broens Pty Limited (in liq) [2018] NSWSC 1747, in which a liquidator was held to be justified in making distributions to creditors in spite of several claims by employees for long service leave entitlements.

What happened?

On 19 December 2016, voluntary administrators were appointed to Broens Pty Limited (the Company). The Company supplied machinery & services to manufacturers in aerospace, rail, defence and mining industries.

This week’s TGIF considers the recent case of Vanguard v Modena [2018] FCA 1461, where the Court ordered a non-party director to pay indemnity costs due to his conduct in opposing winding-up proceedings against his company.

Background

Vanguard served a statutory demand on Modena on 27 September 2017 seeking payment of outstanding “commitment fees” totalling $138,000 which Modena was obliged, but had failed, to repay.