In a recent judgment, the German Federal Court of Justice (Bundesgerichtshof) took the opportunity to clarify its position on sec. 17(2) German Insolvency Act (Insolvenzordnung, InsO). According to sec. 17(2) InsO a debtor is deemed insolvent if he is unable to pay his debts as they fall due (Zahlungsunfähigkeit).

The Facts

In between the presentation of a winding up petition and making of a winding up order, a company entered into a settlement agreement with the Respondent, who founded the company and was previously a shareholder and director of the company.

The Decision

An increasing body of English case law has recognised cryptocurrencies as a form of property giving rise to the possibility of insolvency clawback claims involving cryptoassets.

Recent developments

The High Court recently dismissed a landlord creditor's application to overturn a company voluntary arrangement (CVA) initiated by coffee shop chain Caffé Nero. Here, we recap the key facts of the case and summarise the highlights of the High Court's ruling.

The facts

In November 2020, Caffé Nero – hit hard by the COVID-19 pandemic – proposed a CVA to creditors to compromise rent arrears (at 30p in the £1) and reduce future rents for the company's premises.

Until recently, an appeal to enter debt restructuring in proceedings opposing a bankruptcy order was not allowed by the Dutch lower courts. In a ground-breaking ruling on 26 March 2021, the Dutch Supreme Court (ECLI:NL:HR:2021:460) put an end to this practice.

The case

In a recent judgment on directors’ liability (Bundesgerichtshof, 18 November 2020, IV ZR 217/19), the German Federal Court of Justice (Bundesgerichtshof) has clarified the scope of D&O insurance coverage, holding that company directors are entitled to its protection.

Background

Unfortunately your business can be confronted with bankruptcy of one of your (Dutch) business partners. In most cases this will damage your business. We can help you to avoid or limit damages. In this edition of TW FOUR we will set out FOUR ways to protect your business from the bankruptcy of one of your (Dutch) business partners.

The facts

A liquidator pursued a claim against a former director of a company, that the transfer of the company’s trading inventory in satisfaction of money owed to the former director was a transaction at an undervalue and/or a preference.

An attempt was made to grant floating charge security over the inventory, which the court found was void as it was granted for existing liabilities, at a time when the company was insolvent, to a connected party.

Key point

• In certain circumstances the court will look to parallel statutory provisions where existing applicable statute does not accommodate the situation, as long as the latter is not offended, expanded or altered by doing so.

The facts

This application for directions was brought by the administrators of Lehman Brothers Europe Ltd (the “Company”) on:

Background

Under German insolvency law, employees are generally protected from claw-back claims. The payment of wages is considered a "cash transaction" if the employer pays the salary within three months of the work being performed. A “cash transaction” can only be contested in limited circumstances. Where a third party pays the salary, the cash transaction privilege remains if it is not clear to the employee that a third party made the payment (s.142(2) and s.3 InsO).

A recent German Federal Court of Justice ruling shows that this protection has limits.