The Federal Court of Justice (BGH) continued with its extensive interpretation of the rules for contesting transactions under insolvency law in a judgment dated 21 February 2013 (BGH IX ZR 32/12). In the case before the court, direct shareholder A in company T sold a claim under a loan to B at below par value. Following assignment, T repaid the loan to B at the nominal amount plus interest. Insolvency proceedings were opened around two months later in relation to T’s assets. The BGH’s decision covers three aspects:
A. Bill of the “Law on shielding credit institutions and financial groups against risks and planning their restructuring and winding-up”
In a recent case decided by the Federal Court of Justice (judgment of 15 November 2012 – IX ZR 169 / 11), an energy supplier had entered into a contract with a customer “which should also terminate without notice if the customer makes an application for insolvency or where preliminary insolvency proceedings are initiated or opened based on an application by a creditor”. When the customer was forced to declare insolvency, the energy supplier and the customer’s insolvency administrator entered into a new energy-supply contract at higher rates, subject to a review of the legal position.
Under the new liability standard set out in section 64 sentence 3 of the GmbHG, which was introduced by the Act to Modernise the Law Governing Private Limited Companies and to Combat Abuses (MoMiG), the managing director of a company is liable for payments to shareholders which necessarily cause the insolvency of the company. The requirement for causality of the payment for insolvency and actual determination of insolvency were matters of dispute. The Federal Court of Justice (BGH) has now established clarity on both points (judgment of 9 October 2012 II ZR 298 / 11).
The Delaware Bankruptcy Court recently held that a third amendment to a lease agreement entered into for the purpose of leasing a second building could not be severed from the original lease agreement; and the debtor was not allowed to reject the lease on that second building under section 365 of the Bankruptcy Code.
It was just an old jalopy legally repossessed by his credit union . . . until he filed a bankruptcy petition and the red lights of the automatic stay started flashing. Smokey pulled the lender over and started issuing citations so be forewarned, put your hazard lights on and drive carefully through the postpetition fog, because this decision is relevant to all secured creditors under all Bankruptcy Code Chapters, not just car lenders under Chapter 13.
In Ben Hur, Judah Ben-Hur’s team of white horses beat Messala’s black horses in the climactic chariot race. In a similar battle to the death in In re Indianapolis Downs, LLC, the white horses won again when Delaware Bankruptcy Judge Brendan L. Shannon confirmed Indianapolis Downs’ joint Chapter 11 plan of liquidation (the “Plan”) over a series of hard-fought objections focusing on the implications of a Restructuring Support Agreement and the propriety of third-party releases.
Last week the United States Bankruptcy Court for the Southern District of New York approved debtor-American Airlines’ motion to enter into a secured financing transaction and repay certain pre-petition aircraft financing without paying make-whole premiums. The indenture trustee sought to ground the motion by asserting that the make-whole had to be paid, but it was the indenture trustee, not American, that crashed and burned.
Last week, the Bankruptcy Court for the Northern District of Texas granted involuntary bankruptcy petitions against ten US subsidiaries of Mexican glassmaker Vitro S.A.B. de C.V. (the “New Debtor Subsidiaries” and “Vitro”, respectively). The ruling is a win in the multi-paned litigation involving certain petitioning noteholders (the “Noteholders”) in their fight against Vitro’s efforts to effect a non-consensual restructuring of their debt through a Mexican insolvency proceeding.
Following the entry into force of the Act to Modernise the Law Governing Private Limited Companies and to Combat Abuses (MoMiG), an atypical silent shareholder must still be treated as a subordinate insolvency creditor for the purposes of section 39(1) no. 5 of the Insolvency Act (InsO) in the event that the company becomes insolvent, assuming the status of the silent shareholder is similar to that of a shareholder in a GmbH (private limited company).