In the course of contesting insolvency, the insolvency administrator can reclaim payments made by the insolvent company. However, the Federal Court of Justice has restricted this possibility.
The recent crises have posed significant economic challenges to a number of companies. Not always could they be overcome, and in the end, stood insolvency. Customers and service providers of the insolvent company are always affected by an insolvency. As a business law firm with a focus on corporate law, MTR Legal Rechtsanwälte represents both debtors and creditors in insolvency law.
A powerful tool in insolvency law is contesting insolvency by the insolvency administrator. According to Sections 129 and following of the Insolvency Act, the insolvency administrator can reclaim payments made by the company before the onset of insolvency. This creates considerable uncertainty for the company’s customers and service providers. They have rendered their services and are now being asked by the insolvency administrator to return the payments received. In some cases, the insolvency administrator demands repayments for payments made years ago.
Companies that have granted their customers payment easements, such as installment payments, are often affected by contesting insolvency. Insolvency administrators frequently interpreted such behavior as the creditor granting payment easements because they already knew of their business partner’s impending insolvency and therefore demanded repayments. Following a change in the law, this should no longer be so easily possible. According to this, the insolvency administrator should only be able to reclaim payments if the creditor was already aware at the time of the received payments that his customer was definitely insolvent. If payment easements, such as installment payments, were granted, this cannot be directly interpreted as the creditor already knowing the debtor’s insolvency.
Corresponding judgments from the Federal Court of Justice have already been passed. For example, in a judgment dated February 10, 2022, the BGH made it clear that prolonged sluggish payment behavior by the debtor does not indicate impending insolvency (Ref.: IX ZR 148/19).
Furthermore, the period for intent-based contesting was reduced from ten to four years.
Before responding to the insolvency administrator’s demands for repayment, it should be assessed whether the claims for contesting insolvency are justified at all.
At MTR Legal Rechtsanwälte, skilled lawyers advise in corporate law and insolvency law.
