The German Federal Court of Justice has tightened its grip on company directors again. In a recent judgment on directors’ liability in insolvency situations, the Court clarified the scope of sections 60- 61 of the German Insolvency Act.

The German Act on the Stabilisation and Restructuring Framework for Business (StaRUG) came into force on 1 January 2021, incorporating the EU Restructuring Directive into German law. It provides the first pre-insolvency restructuring framework for the reorganisation of companies facing "imminent illiquidity" and the possibility of involving dissenting creditors. The restructuring plan – which is very similar to the English Scheme of Arrangement and the German insolvency plan – is the central instrument.

Section 1 StaRUG

Alongside the permanent reforms to English insolvency law introduced by the Corporate Insolvency and Governance Act 2020, the government introduced a temporary suspension of certain provisions of the Insolvency Act 1986 (the IA) to address the economic turbulence caused by the COVID-19 pandemic.

The UK’s corporate governance regime has been stress-tested in the past decade and in many respects it has done well. However, in response to certain high profile corporate collapses which have caused heavy losses for creditors, in particular individuals and suppliers with little opportunity to protect themselves against losses, and in the spirit of continual improvement, the government has recently launched its “Insolvency and Corporate Governance Consultation”.

The consultation indicates that the government is considering changes in the law to address:

In a recent ruling, the Austrian Supreme Court has defined de facto managing directors and their obligations and liabilities in connection to wrongful trading.

The decision

The key takeaways from the ruling are:

Under section 64 of the German Companies Act (GmbHG), the managing director of a company is obliged to reimburse payments which have been made after the company becomes illiquid or over-indebted but not when the payments are made with the diligence of a prudent businessman. Such permitted payments include those that are necessary for production, internal operation, and the maintenance of the business concern.

Sommaire

Actualité législative et réglementaire

• Ordonnance n°2017-1519 du 2 novembre 2017 relatif aux procédures d’insolvabilité
• Décret n°2017-1416 du 28 septembre 2017 relatif à la signature électronique

Jurisprudence

Etihad, die staatliche Fluggesellschaft der Vereinigten Arabischen Emirate, war Hauptaktionärin der Air Berlin. Etihad stellte Air Berlin seit 2011 Liquidität zur Verfügung. Als sie die finanzielle Unterstützung im August 2017 beendete, stellte Air Berlin wenige Tage später beim Amtsgericht Charlottenburg einen Antrag auf Eröffnung des Insolvenzverfahrens. Die rechtlichen Folgen dieser Insolvenz sind immer noch nicht ganz abgearbeitet. Ein wirtschaftlich bedeutender Aspekt beschäftigte zuletzt die deutschen und englischen Gerichte.

Sachverhalt

On 30 July 2020, the UK Insolvency Service published its quarterly insolvency statistics. Notably:

Caveat Creditor…

Following a lengthy consultation period, the Ministry of Justice has now published the new Pre-Action Protocol for Debt Claims (‘the Protocol’). This will be of general interest to everyone, but perhaps particularly to landlords with individual tenants.