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20 November 2012
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Schultze & Braun News

Recent publications

Dr Annerose Tashiro
From Bondholder to Equityholder: Still a Difficult Route in Germany?
ABI Journal, June 2012, 44-45, 84-85

Frank Tschentscher
Germany welcomes new Insolvency rules
The Lawyer, www.lawyer-monthly.com, April 2012, 1-2

Frank Tschentscher
Germany : Good Tidings
The European Lawyer 02 2012, 31-32

Frank Tschentscher
The Germans are not coming
Accountancy Age, 12.03.2012

Dr Annerose Tashiro / Patrick Ehret / Frank Tschentscher
Trust, Parallel Debt Mechanism under N.Y. Law Are Now Recognized in French Insolvency Law
ABI Journal February 2012, 30 et seq.
Insolvency law news
There is no rest for legislators. Even before discussions on the second stage of the reform of the Insolvency Code (InsO) have concluded (1st stage = Act for the Further Facilitation of the Restructuring of Companies (ESUG): strengthening creditor rights; 2nd stage: modifying consumer proceedings; and 3rd stage: introducing group insolvency law), legislators already find themselves forced to make further changes. As so often in the past, these changes have been introduced through the “back-door”, in other words in the form of a recommendation by the Bundestag’s Legal Affairs Committee in the Act on the Introduction of Instructions on the Right of Appeal in Civil Procedure (Gesetz zur Einf├╝hrung einer Rechtsbehelfsbelehrung im Zivilprozess) (BT-Drucks. [Bundestag Printed Papers] 17/10490 and 17/11385, Articles 18 and 19).

We hope you find this interesting reading.

Dr Annerose Tashiro
Attorney at law in Germany
Registered European Lawyer (London)
Dr Annerose Tashiro
Dr Annerose Tashiro
Transitional provision on the concept of overindebtedness to be made permanent

On 9 November 2012, the Bundestag decided that the new provision governing the concept of overindebtedness, introduced in 2008 and in force until 31 December 2013, would also apply after that date. The concept of overindebtedness provided for in Section 19 (2) sentence 1 of the InsO had been revised during the course of the financial crisis to the effect that overindebtedness does not exist if the continued operation of the enterprise is substantially likely in the circumstances. The latter case applies if it can be shown to be plausible based on a financial plan that the enterprise will remain liquid or that its liquidity can be restored. The provision was initially in place until 31 December 2010, a time limit which was first extended until 31 December 2013 and is now finally being removed altogether. Doing away with the time limit simply applies in law what has until now proven to be the case in practice.

Division of competence between judges and judicial civil servants – clear cut-off date

Legislators have also introduced a provision regarding the cut-off date for the transfer of responsibility from judicial civil servants (Rechtspfleger) to judges for the plan procedure provided as an alternative to standard proceedings. Together with the changes to the concept of overindebtedness, the Bundestag has decided that judges shall in future have responsibility for the plan procedure if the insolvency proceedings were applied for from 1 January 2013 onwards, whereas judicial civil servants will continue to have responsibility for all proceedings applied for before that date. This is intended to avoid responsibility being transferred from the judicial civil servant to the judge in the middle of an ongoing plan procedure.

In the ESUG, legislators had already revised the powers of judges and judicial civil servants in insolvencies. Responsibility for plan procedures was transferred from judicial civil servants to judges for the purposes of assessing those procedures. Unlike the other ESUG amendments, which largely came into force on 1 March 2012, this amendment does not become effective until 1 January 2013. However, in drawing up the ESUG legislators failed to take account of the fact that although responsibility would be transferred, this would occur irrespective of what stage the proceedings themselves were at. Hence, in the last few weeks a number of scenarios have been discussed by practitioners, ranging from the judicial civil servant handing over an ongoing plan procedure to the judge at the beginning of the year to the judicial civil servant retaining responsibility for an ongoing plan procedure, with the decision on the confirmation or refusal of the insolvency plan pursuant to Section 248 of the InsO being signed by a judge as well. The ensuing uncertainty has now been removed as a result of this clear cut-off date provision.

Dr Annerose Tashiro
Attorney at law in Germany
Registered European Lawyer (London)


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