On 23 February 2011, the Federal Government (Bundeskabinett) adopted the government draft (Regierungsentwurf) of an act (Entwurf eines Gesetzes zur weiteren Erleichterung der Sanierung von Unternehmen) that proposes material changes to the German Insolvency Act (Insolvenzordnung). The government's aim is to modify the economic terms for the restructuring of distressed companies .
On the bill of the Federal German Government for an Act Serving the Further Facilitation of the Reorganization of Enterprises (ESUG)
Last month, the German Ministry for Justice and Legal Affairs (Bundesjustizministerium) published a draft law proposal aimed at further "facilitating the restructuring of businesses".
German Insolvency Law
The German Federal Civil Court (BGH) in its decision of 15 April 2010 (IX ZR 188/09) clarified the legal position of holders of preferred stock in insolvency plan proceedings.
As part of the German government’s costs savings package, a change in the German Insolvency Code may be implemented which will grant to the German fiscal authorities a preferred creditor status.
The impact of insolvency proceedings on arbitral proceedings is becoming an increasingly important consideration for parties. Two scenarios can be generally envisioned: (i) a company files for insolvency while it is engaged in arbitral proceedings; or (ii) arbitral proceedings are initiated after insolvency proceedings have commenced. In both scenarios, the parties need to assess how the insolvency proceeding affects the arbitral proceedings. This article assesses the impact of insolvency proceedings initiated in Germany on foreign arbitral proceedings.
Tax treatment in the hands of the creditor
If a creditor waives an intra-group receivable, this leads to an accounting loss in the amount of the receivable. Such loss, however, is not automatically tax-deductible in the hands of the creditor.
Brian Bolin, Paul Weiss Rifkind Wharton & Garrison
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
Introduction
The latest in the series of insolvency regime reformations in the Middle East is the new Dubai International Financial Centre insolvency law; DIFC Law 1 of 2019 (the New Law). Subject to article 1(4) of the New Law, the New Law repeals and replaces DIFC Insolvency Law 3 of 2013 (the Old Law). Article 3 of the New Law states that it applies in the jurisdiction of the DIFC, meaning that it applies to all DIFC incorporated entities. The New Law will come into force on 28 August 2019.