Germany: Insolvency/Bankruptcy

The Higher Regional Court of Düsseldorf has issued a landmark ruling clarifying managing director liability under § 15b InsO in intra-group cash pool structures. The judgment addresses critical questions about payment cessation, balance sheet insolvency, and the standard of care applicable after expiry of the grace period, with significant implications for corporate groups operating cash pooling arrangements.

The Higher Regional Court of Düsseldorf has issued a comprehensive ruling on director liability under § 15b InsO in corporate cash pool structures. The decision clarifies critical questions regarding the payment concept, cessation of payments in group structures, and the standard of care after expiration of the grace period, confirming the continued applicability of principles developed by the Federal Court of Justice under former § 64 GmbHG.

When a licensor becomes insolvent, licensees face the risk of losing business-critical IP rights as insolvency administrators can elect to terminate ongoing license agreements. This article examines practical protective measures including sublicenses, escrow arrangements, and security interests that can help safeguard licensee interests, while acknowledging their limitations and the strategic considerations necessary when structuring IP license agreements.

A crisis at the cash-pool leader does not automatically make cash pooling impermissible. It does, however, materially intensify the review, monitoring and documentation duties of managing directors at the level of each participating company. The key issues are recoverability of the repayment claim, practical access to pooled funds and protection of the company’s own minimum liquidity.

Shareholder loans serve as vital financing tools for German Mittelstand companies, but they can trigger insolvency obligations when financial difficulties arise. A qualified subordination (qualifizierter Rangrücktritt) offers a solution by converting these loans into liable capital, yet the Federal Court of Justice has established strict substantive requirements that must be met to achieve the desired legal and tax effects.

Mayer Brown's "Knowledge Nuggets – Insolvency & Restructuring" series delivers concise, actionable insights into critical insolvency law topics. From recognizing warning signs of insolvency and managing director liability to safeguarding supply chains through direct payment arrangements, these resources help legal and business professionals navigate complex restructuring scenarios with clarity and confidence.

In a distressed debt scenario, a negotiated, out-of-court, consensual solution is invariably the best outcome for the debtor and its creditors.

In two decisions, the European Court of Justice ("ECJ") ruled on 7 December 2023 on SCHUFA scoring and the processing practices of SCHUFA Holding AG...

Der Bundesgerichtshof hat in einer aktuellen Entscheidung des für Insolvenzrechts zuständigen IX.