Fabio J Guzmán-Saladín and Pamela Benzán, Guzmán Ariza

This is an extract from the 2020 edition of the Americas Restructuring Review, published by Global Restructuring Review. The whole publication is available here.

In summary

German Insolvency Law

an overview.

The insolvency challenge rights give the insolvency administrator, under certain prerequisites, access to assets which the debtor disposed of to the detriment of the creditors prior to the filing for insolvency, thus increasing the insolvency estate.

Schweigen des Schuldners als Beleg seiner Zahlungsunfähigkeit

Silent Debtors Prove Their Illiquidity

Introduction

(German federal high court – decision of September 24th, 2015 – IX ZR 272/13)

Legal background

In accordance with sec. 166 para 1 German Insolvency Code (“InsO”) an insolvency administrator is entitled to utilise tangible assets in his possession, even where the assets are encumbered.

Although the German Insolvency Code regulates the disposal and utilization of tangible assets and claims encumbered in favour of a creditor no regulation exists for rights such as shares, trademarks or intellectual property rights.

On February 24, 2016, the legal committee (Rechtsausschuss) of the German parliament (Bundestag) held a hearing on the proposed reform to considerably limit the clawback regime (Insolvenzanfechtung) in the German insolvency code (Insolvenzordnung – InsO). The general gist of hearing was that the current German governing party coalition is still determined to enact the reform, with some modifications as to the scope and protected parties still up for discussion.

Einleitung

Minor instalment payments alone – also in the event of late payments – may not be sufficient to trigger knowledge of the debtor’s imminent illiquidity within the meaning of section 133 German Insolvency Act

Overview