04 Sep New procedural law for German group insolvencies as of 24 April 2018
On 24 April 2018, the Law to Facilitate the Management of Group Insolvencies (Gesetz zur Erleichterung der Bewältigung von Konzerninsolvenzen), which creates special procedural rules for German group insolvencies in the German Insolvency Code (InsO), will come into force. So far, there are no special rules in German insolvency law for group insolvencies so that the judicial responsibilities for insolvency proceedings of the respective group companies can fall apart and therefore, in the worst case, even different insolvency administrators can be appointed (which of course makes a uniform group-wide run-off or restructuring difficult). Since 26 June 2017, there are group insolvency procedural rules at European level (Art. 56 et seq. European Insolvency Regulation¹).
With the new German law, German group insolvency proceedings can be concentrated at a new group court venue (§§ 3a, 3d InsO). Furthermore, the insolvency courts will be obliged to consult each other on the appointment of a single insolvency administrator for the group companies (§ 56b InsO). However, a mandatory appointment of a single administrator has not been enacted in the law. If, despite these new rules, several insolvency administrators or different insolvency courts are involved, a duty of cooperation between the insolvency administrators and insolvency courts has been introduced (§§ 269a, 269b InsO). Furthermore, § 269c InsO permits the creation of an additional group creditors’ committee. Finally, the new law introduces a so-called coordination proceeding, which the insolvency court at the group court venue can initiate upon request (§ 269d InsO). In this case, the court appoints an independent procedural coordinator who attempts to harmonise the individual group insolvency proceedings, in particular by means of a so-called coordination plan (§§ 269e, 269f, 269h InsO).
The new law for German group insolvencies partly goes beyond the already mentioned European group insolvency rules in the European Insolvency Regulation (there is no uniform group court venue according to § 3a InsO in the European Insolvency Regulation), but remains behind the US American case law of substantive consolidation (i.e. the quasi-merger of insolvency estates of several debtors) in a joint administration.