German Insolvency Law
an overview.
The EU Decision
The EU Commission has held on January 26, 2011 that the so called restructuring privilege offered by German corporate tax law, which allows corporations in a distressed financial situation to continue to set off tax loss carry forwards against future profits even if their shareholder structure has substantially changed, is incompatible with EU State Aid provisions.
The recipients, which have applied the restructuring privilege, are now threatened with the reclaim of the tax benefits.
German Insolvency Law
- In the current economic climate personal insolvency is common place. According to the official figures, the number of personal insolvencies has risen from about 8,000 per quarter in 2002, to a peak of about 35,000 per quarter at the beginning of 2010. The current trend is a gradual reduction, the second quarter of 2012 seeing 27,390 personal insolvencies. In the last 12 months there have been 115,407 personal insolvencies: 35,456 bankruptcy orders; 30,816 debt relief orders; and 49,135 individual voluntary arrangements.
The UK Financial Services Authority (“FSA”) confirmed on 31 Oct. 2011 that MF Global UK Limited (“MF Global UK”) will be subject to the new Special Administration Regime (“SAR”).[1] This is the first time that the new regime, set out in The Investment Bank Special Administration Regulations 2011 (“SAR Regulations”)[2] has been invoked.
Background
Belmont Park Investments Pty Limited v BNY Corporate Trustee Services Limited and another [2011] UKSC 38.
The Supreme Court has clarified the extent to which it is possible for a contract to provide for a company or individual to lose assets on insolvency.
Summary
Well-established rules are unchanged, so landlords can still forfeit leases on insolvency. In other cases, if a transaction is entered into in good faith and for valid commercial reasons, it is likely to be upheld.
Insolvency procedures involving companies are complex and generally take a long time to complete. There is plenty of jargon which adds to the confusion, whereas all that an unsecured creditor usually wants to know is how to make a claim for the monies owed to him by the company, to whom the claim should be made, how long it will take to decide the claim and whether there is a possibility of recovering any monies from a company which is obviously experiencing financial difficulties.
On August 2, the English Court of Appeal handed down its judgment on the client money directions application made in the Administration of Lehman Brothers International (Europe) (LBIE). The Court of Appeal overturned Mr. Justice Briggs’ High Court decision in part, holding unanimously that:
The U.K. Court of Appeal (the “Court of Appeal”) on Aug. 2, 2010, handed down a long-awaited decision regarding an appeal related to the scope of, and eligibility to receive distributions from, the Lehman Brothers Europe (International) (“LBIE”) pool of client money. Lehman Bros. Int. (Europe) (In Administration) v CRC Credit Fund Ltd. & Ors, [2010] EWCA Civ 917 (appeal taken from the Chancery Division) (U.K.).
As previously described in our Alert of Oct.