The Insolvency Laws of Germany

I. OVERVIEW OF GERMAN BANKRUPTCY AND INSOLVENCY LAW

    A. Public Attitude

    1.   Traditional Understanding
    2.   Main Points of Criticism
    3.   Inception of Reform

    B. General Overview

    1.   Legislative History of the New Insolvency Act
    2.   Main Objectives of the German Insolvency Act
    3.   Major Changes of German Insolvency law

    C. Applicable Statutes

II. FORMS OF BUSINESS ENTITIES AND OBLIGATIONS

    A. Business Entities Subject to Insolvency Proceedings

    1.   Forms of Business Entities
    2.   Eligibility for Insolvency Relief

    B. Obligations

    1.   Unsecured Obligations
    2.   Secured Obligations

III. CONSEQUENCES OF INSOLVENCY

    A. Definition of Insolvency

    B. Obligations of the Enterprise in Financial Distress

    1.   Duty to Initiate Insolvency Proceedings
    2.   Liability for Failing to Initiate Insolvency Proceedings
    3.   Disclosure Obligations

    C. Potential Liabilities of Directors, Management or Shareholders

    1.   Transactions Within a Business Group and Payments to Creditors
    2.   Self-Dealing and Fraudulent Conveyances
    3.   Personal Liability for Tax, Employee and Other Claims

    D. Liabilities Imposed on Creditors

    E. Unitary Proceedings

IV. OUT OF COURT PROCEDURES (CONSUMER BANKRUPTCY PROCEEDINGS)

V. LIQUIDATION PROCEEDINGS

    A. General Observations

    B. Commencement of Insolvency Proceedings

    1.   Presentation of Petition
    2.   Statutory Grounds
    3.   Preliminary Measures for the Protection of the Estate
    4.   Subsequent Stages in the Proceedings

    C. Effect of Commencement of Insolvency Proceedings

    1.   General Provisions
    2.   Adoption and Performance of Contracts

    D. Administration of the Proceedings

    1.   The Court
    2.   The Insolvency Administrator
    3.   Secured Creditors
    4.   Unsecured Creditors
    5.   The Creditors' Meetings
    6.   The Creditors' Committee
    7.   Employees of the Debtor
    8.   Financing
    9.   Self-Administration

    E. The Estate

    1.   General Provisions
    2.   Assets of Affiliated Entities
    3.   Contract Rights

    F. Augmentation of the Estate - Avoiding Powers

    1.   General Requirements
    2.   Preferences
    3.   Fraudulent Conveyances
    4.   Effect of Avoidance

    G. Recognition of Claims and Distribution of Property

    1.   Filing of Claims
    2.   Schedule of Claims
    3.   Equal Treatment of Claims
    4.   Preferential Claims
    5.   Submission to Domestic Jurisdiction

    H. Discontinuance

    I. Termination of Liquidation Proceedings and Its Effect

    1.   General Provisions
    2.   Discharge

VI. REORGANISATION

    A. General Observations

    B. Commencing Reorganisation

    C. Effect of Commencement of Reorganisation

    1.   General Effects
    2.   The Position of Employees

    D. Administration of the Proceedings

    E. The Estate

    F. Augmentation of the Estate

    G. The Insolvency P!an

    1.   Drawing Up the Insolvency Plan
    2.   Approval and Confirmation of the Insolvency Plan
    3.   Effect of the Plan
    4.   Implementation and Supervision of the Insolvency Plan

    H. Disposal and Distribution of Property in a Reorganistion Case

    I. Failure of Reorganisation

    J. Termination of Reorganisation and Its Effect

VII. EXTRATERRITORIAL JURISDICTION AND ENFORCEABILITY

    A. Recognition of Foreign Insolvency Proceedings

    1.   Fundamental Principles
    2.   Recognition
    3.   Discharge Granted by a Foreign Court
    4.   Effect of Foreign Proceedings on Domestic Proceedings

    B. Ability of Foreign Estate Representatives to Sue or Assert Control Over Assets of the Estate

    C. Enforcement of Foreign Judgments and Court Orders Generally

    D. Extraterritorial Effect of Domestic Insolvency Proceedings

    1.   International Jurisdiction of German Courts
    2.   Principle of Universality

    E. The European Union Convention on Insolvency Proceedings

    1.   Scope of Application
    2.   International Jurisdiction
    3.   The General Conflict Rule Under the Convention
    4.   Recognition of Insolvency Proceedings
    5.   Secondary Proceedings
    6.   Co-ordination Between Main and Insolvency Proceedings