How Does Bankruptcy Work in Germany?
Bankruptcy in Germany is a process that allows a company to make a series of arrangements with its creditors. These arrangements are approved by the insolvency manager and the court. They also give a bankruptcy debtor the ability to terminate an employee and executory contracts. The German Insolvency Code is a significant improvement over the Bankruptcy Code.
Insolvency proceedings entitle the debtor to terminate executory contracts
Whether a debtor can terminate executory contracts in Germany is a complex question. While the German courts will not compel the debtor to terminate an executory contract, the process does not permit the debtor to terminate the contract unilaterally. In such cases, a debtor may instead choose to opt for the StaRUG process, which offers multiple tools for debtors with primary interests in Germany. To participate in StaRUG, the debtor must not have filed for insolvency at the time of the restructuring process.
A debtor may not terminate an executory contract before the bankruptcy case is started. However, German insolvency law specifically states that when a bankruptcy case is filed, contracts may be terminated. However, certain contracts are explicitly prohibited in bankruptcy, such as those involving conditional sales. In these cases, the debtor’s buyer and seller cannot terminate the contract, and the trustee may exercise his power to reject the contract.
German Scheme proceedings entitle the debtor to terminate employee contracts
Under German scheme proceedings, the debtor has the right to terminate employee contracts in certain cases. The employee contracts will be terminated after a period of notice set by the insolvency court. However, there are a number of conditions that must be fulfilled. These conditions include notice periods of three months or less, fixed-term employment contracts, or prohibitions against termination. Insolvency proceedings can also entitle the debtor to terminate contracts in certain situations, including in a way that does not breach the provisions of existing special statutory protections against unfair dismissal.
The Debtor can renegotiate the termination terms in certain cases. However, this is often not possible. In addition, German laws prohibit the debtor from terminating employment contracts of employees who have been employed for more than six months. The debtor can also only terminate the employment contracts of employees with a specific reason if the employees have been employed for more than five months.
German Insolvency Code is an improvement to the previous Bankruptcy Code
The new German Insolvency Code is a significant improvement over the previous Bankruptcy Code, as it is designed to protect the value of a company in the event of insolvency. It allows for a more structured insolvency process that is overseen by the courts and allows companies to select the creditors and trustees they wish to deal with. Additionally, creditors and employees are now allowed to participate in creditors’ committees.
The new German insolvency law allows for claw-back. This applies to certain types of claims that have accrued interest. For example, a creditor can get interested back on a covered claim if a company defaults on a payment. This is possible under Section 143 para. 1 clause 3 IC and Section 291 of the German Civil Code. However, if the insolvency administrator puts the creditor into default, or files suit, the interest begins to accrue.
Insolvency plan proceedings are more popular than self-administration
Germany’s insolvency code is undergoing a major overhaul, and insolvency plan proceedings are becoming increasingly popular. The new insolvency code aims to reduce the perceived risk of investment in the German marketplace and increase the availability of financing. Until recently, however, investors had a hesitance to invest in German companies, as the current legal framework was unfavorable to insolvency.
The changes have been welcomed in early cases and are proving more efficient than ‘Schutzschirm’ procedures. However, this is only true if the management team is experienced and savvy. As a rule, self-administration is easier to handle than ‘Schutzschirm’ proceedings, which can be difficult to navigate and can be subject to a number of legal risks.
The function of the creditors’ committee in bankruptcy
The German Insolvency Code has several methods for resolving insolvency, including formal restructuring and insolvency proceedings. In the past, many German companies have used these alternatives to solve their financial issues. These options generally reduce personal liability, but there are also risks associated with their implementation. If a company cannot complete a restructuring or insolvency process in Germany, it may use the services of a foreign bankruptcy court.
The creditors’ committee in a bankruptcy case in Germany performs a similar function to the creditors’ committee in chapter 11 in the United States. This committee makes decisions regarding the strategy to be adopted by the insolvency officeholder. Most insolvency officeholders comply with the decisions of the creditors’ committee. Those who refuse to comply risk personal liability. The creditors’ committee also nominates a preliminary insolvency officeholder.
If you have any questions, you can get a free consultation with Ascent Law LLC:
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When you need a Bankruptcy Lawyer, contact this law firm:
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84088 United States
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Moab, Utah
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Moab, Utah
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Southbound Main Street (U.S. 191) (2012)
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Location in Grand County and the state of Utah
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| Coordinates: 38°34′21″N 109°32′59″WCoordinates: 38°34′21″N 109°32′59″W | |
| Country | United States of America |
| State | Utah |
| County | Grand |
| Settled | 1878 |
| Incorporated | 1902 |
| Named for | Moab |
| Government
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| • Type | Mayor/city council |
| • Mayor | Joette Langianese |
| Area | |
| • Total | 4.80 sq mi (12.42 km2) |
| • Land | 4.80 sq mi (12.42 km2) |
| • Water | 0.00 sq mi (0.00 km2) |
| Elevation
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4,026 ft (1,227 m) |
| Population
(2020)
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| • Total | 5,366[1] |
| • Density | 1,117.92/sq mi (432.05/km2) |
| Time zone | UTC-7 (Mountain (MST)) |
| • Summer (DST) | UTC-6 (MDT) |
| ZIP Code |
84532
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| Area code | 435 |
| FIPS code | 49-50700[3] |
| GNIS feature ID | 1430389[4] |
| U.S. Routes |  |
| Website | moabcity |
Moab (/ˈmoʊ.æb/ (
listen)) is the largest city and county seat of Grand County[5] in eastern Utah in the western United States, known for its dramatic scenery. The population was 5,366 at the 2020 census.[6] Moab attracts many tourists annually, mostly visitors to the nearby Arches and Canyonlands National Parks. The town is a popular base for mountain bikers who ride the extensive network of trails including the Slickrock Trail, and for off-roaders who come for the annual Moab Jeep Safari.[7]
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How does bankruptcy work in Germany?https://t.co/vU9sXWTiaL pic.twitter.com/cYlKSi68Ah
— Jan Meriss Alfonso (@MerissJan) November 11, 2022
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