The silver lining at Germany’s economic sky anticipated in my March monthly (here) got even brighter in April 2019. But, as we will see in the following, the positive development hinges on particular factors, which might not last long. But let’s go through the data in the usual order:
It doesn’t have to be the so-called “Panama papers” or the documents on “Luxembourg leaks” that fall into the employee’s lap – often unintentionally and rather accidentally. But how should an employee behave if s/he becomes aware of irregularities in the company? Given the potentially far-reaching consequences of (unreported) irregularites, the question “What does this concern me?” seems to be rather misplaced for managing directors as well as for ordinary employees alike. In the following, I would therefore like to make a few comments and give some hints as to the “correct” behaviour in the event of irregularities within a company.
In February 2019, the German economy – if not paralysed (as in the last month, cf. here) – presented disappointing early indicators such as orders and production while other (rather lagging) indicators such as unemployment or corporate insolvencies still show record-low-levels. Let’s look at the development in more detail:
Not surprisingly, at least for the experts, the German Federal Civil Court (BGH) decided in April 2018 that (at least) the “Chief Restructuring Officer” (CRO) (“Eigenverwalter” = managing director responsible to guide the company through the DIP-insolvency procedure) is liable in the same way as an insolvency administrator for contracts concluded with creditors while under insolvency protection.
The “Brexit”, i.e. the formal withdrawal of Great Britain from the European Union, due to take place at midnight on 29 March 2019, is not only casting its shadows in company and insolvency law. In view of the current, rather confused situation, companies can no longer wait for the outcome of the negotiations between the United Kingdom and the European Union. The time needed to implement measures that have been identified as relevant means that they must act now – and actually they act, as the example of the car manufacturer Honda shows, who wants to close down his English plant completely – probably also against the background of a free trade agreement between the EU and Japan (here).
The following article examines the current political/economic situation in order to derive general recommendations and concrete consequences for the (resilient) preparation of companies in the area of company and insolvency law.
Although indications that the German economy ended 2018 in negative territory kept piling up (cf. here for the previous month), the sentiment indicators’s downward path of earlier months accelerate in sync with the industrial production and orders, Destatis just announced that the German economy “only” stalled in the last quarter of 2018. Let’s look at the development in more detail:
If a third party (not obliged to do so) settles liabilities of the (future) insolvency debtor from its own resources, the question arises as to whether such payments may be avoidable under German insolvency law. At present, this question is repeatedly raised by the insolvency administrator in the context of a larger insolvency procedure in Berlin. Reason enough to take a closer look at the current case law.
First of all, I wish all of you a Happy New Year and hope that you had a Merry Christmas with some time to lay back and relax after a year of relentless growth in Germany. The new year, though, does not paint a too glossy picture: Not all figures are in, but it seems that the economy stopped growing at the end of 2018. Also the sentiment-indicators are now facing south in sync and for months in a row and the DAX has reached “bear-territory” at the end of the year.
The implicit forecast of my last monthly report, “southbound” (cf. here) has not really materialised in November. Although leading pundits reduced their forecast for German growth and the DAX did lose another roughly 200 points, exports remain rather strong, unemployment figures are unbelievably low, etc. Hence, also the decline takes some time. But see for yourself: