BGH on illiquidity – circumstantial evidence trumps status

In a lively discussed decision of June 28, 2022, the II. Civil Senate of the German Federal Court of Justice (Bundesgerichshof, BGH) ruled that illiquidity within the meaning of § 17 para 2 s. 1 InsO may not (only) be demonstrated by drawing up a liquidity status, but may also be demonstrated by other means.

Even if some commentators would like to derive a change in the previous BGH line from this judgment (e.g. Comtesse, ZInsO 2022, 2329) and the German Association of Insolvency Administrators (VID) apparently sees itself as the spiritus rector of this decision because of its “Recommendations on the Determination of Insolvency” published in connection with the judgment (here, in German), this decision rather joins a series of other decisions of the BGH on this subject.

First of all, in the June decision, the II Civil Senate itself refers at a decisive point (para. 14) to a judgment of the IX Civil Senate from April 2022 issued shortly before: “In the case law of the BGH, it is recognized that the inability to pay may also be demonstrated in a different way than by a mere periodical assessment. For example, it is considered permissible to demonstrate the inability to pay by means of a liquidity status on the reference date in conjunction with a financial plan for the three weeks following the reference date, in which incoming payments and outgoing payments are compared on a daily basis (see BGH, judgment of April 28, 2022 – IX ZR 48/21, WM 2022, 1287 marginal no. 18).” In order to then add itself: “There is also nothing to prevent the presentation of several daily liquidity statuses in a meaningful number to demonstrate the inability to pay, in which, starting from the status showing a significant shortfall on the reporting date, the liquidity gap cannot be closed in a relevant way on any of the balanced days lying in the forecast period.” (see also in BGH, Urt. v. 28.06.2022 – II ZR 112/22, para. 14)

In the aforementioned ruling from April 2022, the BGH supposedly went even further when it stated: “The cessation of payments can be inferred from a single indication if this indication has sufficient significance. If there is a lack of a sufficiently meaningful single piece of circumstantial evidence, the inference of cessation of payments can only be considered if the totality of circumstantial evidence justifies the full judicial conviction of cessation of payments.” (Guiding principle, as well as para. 28) In other words, according to the opinion of the IX Civil Senate, not even the triple listing of a liquidity status is required to prove the cessation of payments; a single indication can already be sufficient to prove the cessation of payments. Thus, for example, the non-payment of social security contributions for more than half a year constitutes, according to consistent case law, a significant evidentiary sign of a cessation of payments (para. 31 with reference to a judgment from 2013).

Even if the civil senates do not expressly refer to this, their case law seems at least inspired by decisions of the criminal senates of the BGH on the same subject, which – most recently in a decision from 2019 – allow the illiquidity under § 17 InsO to also be determined on the basis of so-called “white collar crime evidence” (para. 17). And the criminal senates also ses the late payment of social security contributions as a possible (but in this case not fulfilled) indication.

Conclusion: Without question, the BGH has expanded the administrator’s options for proving insolvency in civil cases by introducing the possibility of also proving the debtor’s insolvency through individual liquidity statuses. The question is, however, whether, in view of the simplified possibilities granted by the criminal senates and by the IX Civil Senate to prove cessation of payments by means of individual indications, a proof by means of liquidity statuses is still necessary at all in most cases – insofar as liability and criminal liability are concerned. There against, e.g. in the case of an application in the context of e.g. the StaRUG or protective shield proceedings (“Schutzschirmverfahren“) according to the InsO, one should agree with the VID that it may be easier to prove impending insolvency with individual statuses. As the decision of the District Court Cologne as of March 3, 2021 (Ref.: 83 RES 1/21, here (in German), discussed here) shows that access to the said restructuring proceedings may well depend on this proof.

BGH, Urt. v. 28.04.2022 – IX ZR 48/21
BGH, Urt. v. 23.06.2022 – IX ZR 75/21
BGH, Urt. v. 28.06.2022 – II ZR 112/21
BGH, Urt. v. 18.07.2013 – IX ZR 143/12
BGH, Beschl. v. 11.7.2019 – 1 StR 456/1
(all decisions are in German)

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