After I had already interpreted (here, in German) some rulings of the 9th Civil Senate last year to the effect that the German Federal Civil Court (“Bundesgerichtshof”, “BGH”) was cautiously following the legislator’s intention to attenuate the law on insolvency avoidance with the reform of 2017 (see here for more details), this impression is now strengthened by a recent decision of 6 May 2021.
Interestingly, the case underlying the BGH’s decision concerns an action for avoidance against the Federal Republic of Germany, more precisely the repayment of an administrative fine imposed by the Federal Office of Justice for the non-publication of a balance sheet. In the matter, the BGH overturned the decisions of the lower courts of the AG and LG Bonn, which denied a challenge with intent pursuant to section 133 InsO.
However, the court did so only with significant restrictions to its own previous case law regarding the avoidance of preferences (“Vorsatzanfechtung“, § 133 InsO). The BGH opens its own round of corrections with the following memorable introduction (para. 30):
“The case law, according to which it is concluded solely from the inability to pay recognised by the opponent of avoidance that the latter is as a rule also aware of the debtor’s intent to disadvantage […], requires a new orientation. The same applies to the determination of the intention to disadvantage the creditor itself. Insofar as case law has hitherto assumed that a debtor who is insolvent and knows of his insolvency generally acts with intent to disadvantage […], it can no longer be based solely on the fact that the debtor knew of his insolvency. This also applies to section 133 InsO in the currently applicable version.”
In order to then go for the (legal dogmatic) sweeping blow in para. 33:
“The conclusion from the recognised insolvency to the subjective prerequisites of the avoidance with intent (to disadvantage) leads in the case of the granting of congruent cover to a far-reaching concurrence with the prerequisites of the avoidance of cover under § 130 (1) sentence 1 no. 1 InsO and thus de facto to an extension of the avoidance period relevant under this provision from three months to ten years under the old law […] and to four years under the new law […]. This does not only meet with concerns regarding the legal system. A corresponding intention of the legislator also appears doubtful.”
In particular, the freshly declared interpretation of the corresponding will of the legislature may at best be described as euphemistic in view of the explanatory memorandum to the reform of § 133 InsO in particular (see here, esp. p. 10 f., in German). In fact, the BGH’s previous case law on this topic may rather confidently be described as contrary to the will of the legislature expressly expressed since 2017. This is because the German Bundestag itself had offered a very, very long list of renowned authors to justify the reform, explaining why the previous BGH practice met with (considerable) legal systemic concerns. Therefore, it could well be that the BGH has ultimately pre-empted a decision by the Constitutional Court with its current change of course.
In the following paragraphs, the BGH then outlines the cornerstones of its new approach. For example, the court indirectly raises the requirements for proving knowledge of the impending insolvency not insignificantly when it requires the occurrence of further circumstances if the debtor does not explicitly state that he is not in a position to pay a due payment obligation – not even in instalments (!) (cf. para. 41 f.).
The extension of the period of consideration to prove the debtor’s intent to prejudice the creditors from the concrete point in time of the legal act (so far) to the question to be answered whether the debtor will not be able to fully satisfy his obligations at a later point in time (now) is particularly important with regard to restructuring efforts. Hence, a corresponding IBR may be able to prove the future (sustainable) restoration of solvency, also retroactively.
However, as the BGH points out in two paragraphs (para. 10 and para. 49 et seq.), the above remarks initially only concern the full proof of the existence of the constituent elements of § 133 (1) sentence 1 InsO, but not the legal presumption contained in § 133 (1) sentence 2 InsO, according to which knowledge of the debtor’s intention to disadvantage creditors is presumed on the part of the creditor if the latter knew that the debtor’s insolvency was imminent and that the act disadvantaged the creditors. However, the BGH’s increased requirements for the provision of full proof are likely to have a “radiating effect” on this legal presumption as well.
While I warned in the above-mentioned commentary from 2020 (again here, in German) not to already then derive a summer from first swallows under any circumstances, the impression that the BGH is actually making a (still cautious) turn away from the much-criticised “chain presumption rule” (see only Beissenhirtz, ZInso 2016, 1778, 1785, available here, in German) is solidifying on the basis of the aforementioned wording in the judgment alone. For this reason, I would not consider this judgement “tempest in a teapot” only, as stated in discussions about the effects of this ruling (as here, in German), even if the actual effects in practice will probably only become apparent in the following years. This is because the lower courts – as shown not only by the rulings of the Bonn courts preceding the BGH rulings – already tend more often to simply not adopt the “chain presumption rule” preferred by the BGH so far. And the BGH has now – in its own way – more than hinted that it will probably sustainably follow the criticism from the literature and the resulting requirements of the legislator through the reform in 2017 (!). Cautious optimism is therefore called for.
BGH, Urt. v. 06.05.2021- IX ZR 72/20 (in German)