Background
Background
In cases where upstream or cross-stream securities are granted by a German limited liability company (”GmbH“), the German capital maintenance rules need to be considered. Under these rules assets that are required for the maintenance of GmbH’s registered share capital may not be paid out to the shareholders. This payout prohibition concerns not only payments, but also granting of securities in favour of loans granted to the shareholders. The managing directors of a GmbH are personally liable for payouts made in violation of these rules.
Background
New rules strengthen the position of individual creditors and weaken the concept of insolvency proceedings as a means of final collective satisfaction of creditors. Taylor Wessing in Bratislava, as an advisor to the Ministry of Justice, has been actively involved in the creation of this new regime.
New provisions
Background
German insolvency law prohibits managing directors from making payments on behalf of the company after it has become illiquid or over-indebted. This does not apply to payments made when acting with the due care and diligence of a prudent business manager. Such payments are privileged as they do not reduce the insolvency estate and do not disadvantage creditors if they allow the business to continue and enable corporate recovery.
Decision
In 2021, the German legislator changed the rules of conduct by inserting a further section into the German Insolvency Code (InsO).
Background
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:
Following the introduction of the Dutch Court Approval of a Private Composition (Prevention of Insolvency) Act (the WHOA), the first court approval for a private composition was granted on 19 February 2021.
Duty of care in tort not established in favour of main contractor from third party sub consultant
Since Article 3: 305a of the Dutch Civil Code entered into force on 1 July 1994, a legal person (usually a foundation) can institute legal proceedings that serve to protect interests outlined in its articles of association (for example, recovering damage caused to the members of the foundation concerned). The mass claims foundation was born.
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.