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Upd@te Germany
29 February 2016
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Schultze & Braun News

Recent publications

Dr Eberhard Braun  (publ.),
Insolvabilité et restructuration en Allemagne – Annuaire 2016, Frankfurt/M. 2015

Joachim Zobel
Transfergesellschaften: Baustein für ein faires Angebot / Sozialverträglicher Personalabbau
Arbeit und Arbeitsrecht 1/16, 22 – 25

Stephan Ries
Zur Aufrechnung rückständiger Steuerforderungen gegen einen antragsabhängigen Steuererstattungsanspruch des Insolvenzschuldners (Anm. zu BFH VII R 29/14), Entscheidungen zum Wirtschaftsrecht (EWiR) 2016, 81 - 82

Dr Christoph von Wilcken
Erstattungsanspruch gegen den Direktor einer in Deutschland tätigen Limited nach § 64 GmbHG
DER BETRIEB, Nr. 04, 29.01.2016


Dr Andreas J. Baumert
Zur „demnächst“ erfolgten Klagezustellung bei PKH-Antrag innerhalb von 14 Tagen nach Zugang der Gerichtskostenanforderung, Anmerkung zu BGH, Urteil vom 03.09.2015 – III ZR 66/14, Entscheidungen zum Wirtschaftsrecht (EWiR) 2016, 31 - 32

Lectures

Spezielle Instrumente der Restrukturierung VIII
Künftige Triggerpunkte: Sanierungszeitraum, Durchfinanzierung, Refinanzierbarkeit
Dr. Wieselhuber & Partner GmbH, 60329 Frankfurt, 7.03.16
Karsten Kiesel

13. Deutscher Insolvenzrechtstag 2016
Be- und Verwertung von (Kredit-)sicherheiten des Umlaufvermögens
Arbeitsgemeinschaft Insolvenzrecht und Sanierung im Deutschen Anwaltverein, 10785 Berlin, 09.03. - 11.03.16
Dr Rainer Riggert

Spezielle Instrumente der Restrukturierung VIII
Künftige Triggerpunkte: Sanierungszeitraum, Durchfinanzierung, Refinanzierbarkeit
Dr. Wieselhuber & Partner GmbH, 40210 Düsseldorf, 14.03.16
Dr Roland Fendel

SanierungsFORUM - Krise, Sanierung und Insolvenz
Insolvenzanfechtung: Leitlinien für den Geschäftsverkehr
FORUM Institut für Management, 50668 Cologne, 17.03. - 18.03.16
Dr Pascal Schütze

Insolvenzanfechtung - Anfechtungsansprüche vermeiden und abwehren
Industrie- und Handelskammer Region Stuttgart, 70174 Stuttgart, 4.04.16
Tobias Hirte
Karsten Kiesel

Risiko Insolvenzanfechtung
Verband der Vereine Creditreform e.V., Creditreform Akademie, 04103 Leipzig, 21.04.16
Rüdiger Bauch
Karsten Kiesel

Qualifizierungslehrgänge für Aufsichts- und Beiräte
Deutsches Verwaltungs- & Aufsichtsrats-Institut (DVAI), 83684 Tegernsee, 22.04.16
Volker Böhm

Handelsblatt Jahrestagung "Restrukturierung 2016"
Pre-Workshop: Die Liquiditätswirkung des Lieferantenpools
Handelsblatt in Kooperation mit EUROFORUM, 60313 Frankfurt, 27.04. - 29.04.16
Dr Rainer Riggert

Vorsatzanfechtung
Anfechtung erfolgreich vorbeugen - vermeiden - abwehren
FORUM Institut für Management GmbH, 80807 Munich, 27.04.16
Tobias Hirte
Karsten Kiesel

Verkauf & Verwertung in Krise und Insolvenz
AV-Service GmbH, 66117 Saarbrücken, 28.04.16
Tobias Hirte

 
The German Federal Court of Justice (Bundesgerichtshof, BGH) improves the rights of creditors with subordinated land charges and mortgages

A creditor secured in a subordinated manner by a compulsory security mortgage whose right does not allow the expectation of a share in the proceeds if the plot of land is realised on account of its value-depleting encumbrance by rights that take priority is in the view of the Federal Court of Justice not obliged, in insolvency proceedings regarding the assets of the owner of the plot of land, to permit the deletion of its security interest for the benefit of the private sale of the plot of land free from encumbrances that is planned by the insolvency administrator.

Manuela C. Becker
Attorney at Law (Germany)

Manuela C. Becker

Facts of the case
The plaintiff is the administrator of the insolvency proceedings relating to the debtor’s assets that were commenced on 9.06.2009. On commencement of the insolvency proceedings, the debtor was co-owner (in a proportion of one quarter) of an apartment property and jointly owned areas on a plot of land on which a residential building was constructed; a further co-ownership share of one quarter belonged to the debtor’s sister.

The debtor’s co-ownership share was encumbered in the Land Register with two owner’s land charges subject to a lien in favour of F. in the amounts of €12,229.26 and €5,417.29. F.’s rights of lien still totalled more than €200,000. A compulsory security mortgage in the amount of €31,616.82 in favour of the defendant commune was registered. Following commencement of the insolvency proceedings, the debtor and his sister acquired the remaining half co-ownership share, which was free of encumbrances, as joint heirs.  

The plaintiff wished to sell the debtor’s rights, with an assumed market value for the entire apartment property and jointly owned areas of €80,000, at a purchase price of €40,000, privately and free of encumbrances, to the debtor’s sister, of which price the insolvency estate and F. were each to receive €20,000. F. declared that he was prepared to permit the deletion of his rights in the Land Register and to pay the defendant commune €200 for its agreement to the sale. However, the defendant refused to agree.

The plaintiff asserted a claim against the defendant for consent to the deletion of the mandatory mortgage registered in the defendant’s favour and for reimbursement of out-of-court lawyers’ fees. After the legal action had been dismissed by the Regional Court, on appeal by the plaintiff the Higher Regional Court ordered that the defendant consent to the deletion; the dismissal of the action was upheld with respect to the lawyers’ fees. The defendant sought to have the action dismissed in its entirety by an appeal on points of law that was allowed by the appellate court division.

Decision
The appeal on points of law was successful; the appellate court division dismissed in its entirety the plaintiff’s appeal against the Regional Court judgment that dismissed the legal action and rendered its own decision on the case.

It stated that a means of providing security legitimately acquired by compulsory enforcement could not be exacted from the creditor solely for reasons of commercial expediency or mere equitableness.
In the present case, the defendant had not committed an abuse of rights by obtaining the security interest because, in view of the real estate liens that were registered with a greater priority and amounted to approximately €200,000 and the value of the entire apartment property that in the present legal dispute was indisputably put at €80,000, for the moment the defendant had a negligible prospect of ever achieving satisfaction from the compulsory security mortgage.

On the one hand it was possible that the priority rights would be cancelled (cf. Section 1179a BGB); on the other hand, the value of the real estate could have risen.

The fact that following the commencement of insolvency proceedings regarding the debtor’s assets the defendant had insisted on the collateral mortgage and refused to allow its deletion also did not constitute an abuse of rights by the defendant. In the event of a private sale of the co-ownership share by the insolvency administrator (cf. Sections 159, 160(2) 1., 164 of the German Insolvency Code (InsO)), it was true that the defendant’s security interest would remain in existence and consequently the purchase price could be reduced.

However, in the event of a forced sale lower proceeds could also result, and this, as in the case of a private sale, would be detrimental to the senior secured creditor towards whose interests the subordinated creditor would have no obligation. This would only damage the insolvency estate if a contribution to costs for its benefit had been agreed and the prospects of the insolvency creditors being satisfied would be reduced if the personal claim of the senior creditor were to remain in existence to a greater degree. However, even these actual consequences did not justify demanding a security interest with absolute effect that had been legitimately acquired, even if it were only a subordinated interest.
The defendant’s request to share in the proceeds of any private sale was likewise not to be regarded as an abuse of rights.

It clearly contradicted the insolvency objective of uniform satisfaction of creditors if the insolvency administrator promised a creditor that was secured by a worthless land charge a cash benefit at the expense of the insolvency estate in return for granting approval to deletion (BGH, order of 20 March 2008 – IX ZR 68/06, NZI [Neue Zeitschrift für Insolvenz- und Sanierungsrecht] 2008, 365, paragraph 6).

However, agreements in which a real estate lien secured in a subordinated manner was given up in return for a payment from the proceeds of the private sale were effective since such payments were only at the expense of the senior secured creditors (BGH, judgment of 20 March 2014 – IX ZR 80/13, NZI 2014, 450, paragraphs 15 et seq., 24). The security interest of the senior secured creditor did not confer on the latter any claim to a private sale, free of encumbrances, of the encumbered plot of land and thus to any possible higher proceeds.

It was in principle to be expected that in the event of a private sale as opposed to a forced sale this creditor would compensate a subordinated creditor with an appropriate share in the proceeds so that the sale could be carried out free of encumbrances.

Comments
As a result of this decision of principle by the Federal Court of Justice, the prospects at trial of subordinated creditors have improved significantly. It cannot fundamentally be regarded as an abuse of rights if a subordinated Land Register creditor requests to have a share in the proceeds of a private sale.

However, in order to avoid a situation inappropriate to the objective of insolvency, the premium for inconvenience is not to be paid by the insolvency estate but by the senior secured creditor from the purchase price (cf. in this respect BGH, judgment of 13.03.2014 - IX ZR 80/13).

Manuela C. Becker
Attorney at Law (Germany)

Impressum

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