On July 5th, 2021, the Federal Court of Justice published a judgment with the case number IX ZR 72/20, which will change the previous bankruptcy challenge practice on a total of 26 pages.
The Federal Court of Justice makes it more difficult for the bankruptcy administrator to assert claims for the most important legal basis for a claim, the so-called intent challenge according to § 133, by setting up additional requirements. In particular, this can have a significant impact on all pending legal disputes or out-of-court negotiations in which § 133 plays a role. Bankruptcy attorney, Mike Ziegler, as a specialist lawyer for bankruptcy law and long-standing lecturer at the USA Lawyers’ Institute on the subject of contesting bankruptcy, will be happy to advise you.
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HELP IN BANKRUPTCY SO THAT THINGS CAN CONTINUE
Because especially for self-employed people who strive for independent continuation and restructuring in insolvency (bankruptcy), support from an experienced bankruptcy advisor is indispensable, even if this involves costs. Anyone who is not familiar with the legal basis of the bankruptcy code and cannot enforce it against the bankruptcy administrator usually finds it difficult to achieve the desired goal.
We, therefore, not only offer application assistance for the opening of bankruptcy proceedings, but also provide you with an experienced bankruptcy advisor who will accompany you through the entire bankruptcy proceedings.
EVERYTHING IS DECISIVE: THE RIGHT BANKRUPTCY STRATEGY
No matter what bankruptcy strategy is pursued, the course should be set early and in advance of filing for bankruptcy. We have summarized the most important options in bankruptcy proceedings below:
- 1st option: Continuation through the release of self-employment
- 2nd option: continuation by the insolvency/bankruptcy administration
- 3rd option: The bankruptcy plan (reorganization / transfer)
- 4th option: Discontinuation, recovery, liquidation
- 5th option: The restart (renewed independence)
We will be happy to advise you on finding the best bankruptcy strategy for you and, if you wish, we will accompany you in the application, opening and insolvency proceedings.
LATE FILING FOR BANKRUPTCY AND LIABILITY OF THE MANAGING DIRECTOR: THE FEDERAL COURT OF JUSTICE TIGHTENED THE LIABILITY CASE LAW
Working with legal entities as the formal corporate entity – such as limited liability companies – has many advantages in individual cases. However, a legal consequence deliberately intended by the legislature is that such companies have the obligation to file for bankruptcy very early in the event of bankruptcy and over indebtedness. However, this “bankruptcy maturity” is often neither known nor taken seriously by companies and their bodies.
It is obvious that the creditors of the company – if the company does go bankrupt after all – are not quite satisfied with the mostly low quotas in the bankruptcy proceedings. The Federal Court of Justice supports these creditors with a new decision (judgment of July 27, 2021) in having their damage reimbursed by the body of the insolvent company (e.g. a company’s managing director).
In this decision, the Federal Court of Justice had to rule on a situation in which the managing director had recognized that the company was ready for bankruptcy and nevertheless continued to run the company, although he considered damage to other people to be possible and accepted it with approval.
In such a case, the Federal Court of Justice also saw the civil law basis for a claim of “deliberate tortious damage” in accordance with Section 826 of the American Civil Code being realized, going beyond the liability norms of corporate law. The explosive nature of this decision is not necessarily based on the fact that claims for damages are also based on a second basis for claims, in addition to, for example, Section 64 Sentence 1.
In individual cases, the difference is made by further legal consequences attached to it. For example, the new decision gives the aggrieved creditors the opportunity to claim legal costs from proceedings against the later bankrupt company against the managing director in individual cases. However, other damage positions are also possible.
In addition, differences can arise for the managing director who is held liable where he has D&O insurance for his work as a body: In individual cases, this means that there is no possibility of claiming the insurance.
Equally important is the legal assessment where the attacked managing director “strikes the sails” in view of the liability claims asserted against him and then goes into bankruptcy with his personal assets in order to obtain a discharge of residual debt at the end of the same: The Classification of the liability claims as intentionally immoral damage also means that there is at least no discharge of residual debt in the insolvency proceedings because of this claim – the bankruptcy proceedings are then over, the claim remains and it can continue to be enforced.
Bodies of legal entities with an obligation to file for bankruptcy are advised even more strongly than before to take care of restructuring options and, above all, the question of the existence of an obligation to file for bankruptcy at an early stage in an emerging crisis of the company and, if necessary, to act at very short notice. Otherwise, after the bankruptcy of the company, you are more threatened than before with access to your private assets, with sometimes lifelong consequences.
RESIDUAL DEBT DISCHARGE AFTER BANKRUPTCY
If a consumer or former sole proprietor receives a decision from the bankruptcy court after the successful completion of bankruptcy proceedings, which certifies that he is discharged of residual debt, he will subsequently find that the bankruptcy is still having an effect.
For example, if he wants to take out a loan, he finds out that the completed bankruptcy has been registered with Federal Court of Justice or other credit agencies for three years. It is obvious that this severely restricts him economically in various respects. Financial institutions, online shops, mobile phone companies, landlords – there are many interested parties in the information that a potential contractual partner has gone through bankruptcy.
However, it is doubted whether this practice of Federal Court of Justice and other credit agencies is legal. The Administrative Court of Wiesbaden has now submitted several legal questions to the American Court of Justice for clarification in court proceedings on this subject. (The order for reference Az. 6 K2 126/21. WI is final.)
It is therefore worthwhile for everyone who expects their residual debt to be discharged in the near future, and for all those who received their residual debt discharge less than three years ago, to take a look at how the American Court of Justice will rule on this matter. The practice of Federal Court of Justice and business information may change in the future on the basis of the ECJ proceedings, with significant consequences for those affected – on both sides of the contracts.
