In a decision which has not yet been confirmed by the German Federal Court, the Higher Regional Court of Celle (an appellate court) has decided that a German policyholder of UK life insurer Equitable Life is not protected by a scheme of arrangement which had been approved by the London High Court in February 2002 (OLG Celle 8 U 46/09 from 8 September 2009). The claimant had challenged that, following the scheme of arrangement, he would have had received lesser profit payments. A final decision of the German Federal Court is expected at the end of 2010.

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.

Last month, the German Ministry for Justice and Legal Affairs (Bundesjustizministerium) published a draft law proposal aimed at further "facilitating the restructuring of businesses".

On 13 July 2010 the Federal Ministry of Justice and Finance (Bundesministerien für Justiz und Finanzen) published a discussion draft of an Act for the Restructuring and Orderly Liquidation of Credit Institutions, for the Establishment of a Restructuring Fund for Credit Institutions and for the Extension of the Limitation Period of Corporate Law Management Liability (Restructuring Act) (Referentenentwurf eines Gesetzes zur Restrukturierung und geordneten Abwicklung von Kreditinstituten, zur Errichtung eines Restrukturierungsfonds für Kreditinstitute und zur Verlängerung der Verj

Introduction

1. Introduction

On 25 August 2010, the German government published a draft of an Act for the Restructuring and Orderly Liquidation of Credit Institutions, for the Establishment of Restructuring Fund for Credit Institutions and for the Extension of the Limitation Period of Corporate Law Management Liability (Restrukturierungsgesetz, the “German Restructuring Act”). It is anticipated that the German Restructuring Act will soon be introduced to the German parliament and be passed quickly.  

Last year, the German government came forward with a ministerial bill for the reform of the German insolvency regulations with regard to licenses. The bill will most likely be enacted in the year 2009.