Author: dev

04/09/2017  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.

30/03/2020  On 25 March 2020, the German Bundestag unanimously passed the draft law to suspend the obligation to file for insolvency until 30 September 2020 in order to protect companies that get into financial difficulties as a result of the corona epidemic (the Bundestag communication of 25 March 2020 can be found here; the draft law of 24 March 2020 can be found here). The Bundesrat approved the draft law in a special session on 27 March 2020.

The core elements of the new law are:

• The obligation to file for insolvency is suspended until 30 September 2020 (the deadline can be extended to 31 March 2021 by statutory order).
• The suspension of the obligation to file for insolvency does not apply if the insolvency is not caused by the consequences of the spread of the SARS-CoV-2 virus or if there are no prospects of eliminating an existing illiquidity.
• If the debtor was not insolvent on 31 December 2019, it is assumed that the insolvency has been caused by the effects of the COVID 19 pandemic and there are prospects of eliminating an existing illiquidity.
• Relief from liability for managers for payments after insolvency has occurred.
• Restriction of insolvency administrators’ claw back rights
• The right of creditors to file for insolvency is restricted for a period of three months, unless the debtor was already insolvent on 1 March 2020 (the three-month period can be extended to 31 March 2021 by statutory order).

The law was promulgated on 27 March 2020 and came into effect (retroactively) from 1 March 2020.

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