BGH on the creditor’s knowledge of a turnaround concept

In a recent ruling of the German Federal Court of Justice (“Bundesgerichtshof“, “BGH“, the BGH continues a decision from 2016 (see here) according to which a serious, albeit ultimately unsuccessful, attempt to restructure the debtor can dispense with both the creditor’s intention to discriminate against the debtor and the opponent’s knowledge of this intention – and thus barr an avoidance action.

In this case, the insolvency administrator had challenged the (proportional) payment of a creditor after an out-of-court settlement – based on a “restructuring sketch” – after the originally planned restructuring had failed and the debtor had become insolvent.

If the opposing party wishes to refute knowledge of the insolvency and thus the presumptive effect of § 133 (1) 2 of the German Insolvency Act (“Insolvenzordnung“, “InsO“), it must prove its lack of knowledge upon receipt of the contested payment. This can also be done on the basis of a serious, but ultimately unsuccessful attempt at reorganisation. In the case decided in 2016, the BGH had initially established the principle that a creditor must insist on the provision of the necessary information on the attempted restructuring in his own interest prior to a restructuring agreement. If he waived this requirement, he was acting with the risk of rescission.

Admittedly, the creditor does not have to expertly examine the debtor’s restructuring concept himself or have it examined by experts. Rather, he could generally rely on conclusive information from the debtor as long as he had no (substantial) indications that he was to be deceived or that the restructuring plan had no prospect of success. However, after the decision of the BGH, the creditor must demand at least so much information for the conclusiveness examination that he can assess the question of the possible disadvantage of other creditors according to the debtor’s concept.

While in the case decided in 2016 the BGH denied the refutation of the above presumption effect because the creditor’s knowledge of a restructuring concept was not based on any knowledge of the creditor of a restructuring concept at the time, the court saw the fundamental possibility of refutation in the current case – and accordingly referred the legal dispute back to the Court of Appeal. On the one hand, a “restructuring sketch” (described in more detail in the decision) is obviously sufficient for the court to accept a “serious restructuring attempt”. On the other hand, in addition to the above explanations on the refutation of the presumption effect, the BGH states that the opponent’s knowledge of the conclusiveness of the restructuring concept does not need to be on the same level as the debtor’s.

With the decision discussed here, the BGH specifies its requirements, created in 2016, for the creditor to have the necessary knowledge of an attempt at reorganisation in order to prevent payments based on such an attempt from becoming voidable. In doing so, the BGH elaborates that the creditor must have a basic knowledge of the restructuring concept and that he must also examine its conclusiveness. However, neither the knowledge nor the conclusiveness test had to be subject to excessive requirements. Rather incidentally, the BGH may itself thereby relativised the requirements for a restructuring concept.

Even if creditors have to meet increased requirements since 2016 in order to avoid a challenge to a payment received later, they also receive more rights vis-à-vis the debtor as a result of the new case-law, e.g. with regard to information on an intended restructuring.

BGH, judgement, 28.03.2019 – IX ZR 7/18

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