Insolvency-specific allocation of claims upon the occurrence of new insufficiency of assets – No modification of insolvency ranking by the Federal Labour Court (BAG)
The Federal Labour Court (BAG), in a recent decision – order of August 25, 2022, Ref.: 6 AZR 441/21 – confirmed that the occurrence of so-called new insufficiency of assets does not bring about a change in the ranking of claims under insolvency law. This finding carries significant practical importance for the treatment of claims in insolvency proceedings and warrants closer examination to clarify potential risks and structuring options for creditors, companies, and other stakeholders.
Basic principles of insufficiency of assets and new insufficiency of assets
The insolvency-specific meaning of asset insufficiency
During opened insolvency proceedings, the available insolvency estate and the claims associated with it are classified into different categories. As soon as the available estate is insufficient to satisfy all insolvency liabilities, asset insufficiency exists (§ 208 InsO). The insolvency administrator must inform the insolvency court of this without delay. Notification of asset insufficiency typically restricts creditors’ access to the free estate and affects the handling and satisfaction of existing liabilities.
New estate and new estate liabilities
After notification of asset insufficiency, only those legal acts conducted by the administrator from that point onwards create so-called new estate liabilities. These must be distinguished from “old estate liabilities,” as according to BAG case law and prevailing academic writing, they are generally to be satisfied with priority from the (now) insufficient estate. A typical case, for example, is the payment of remuneration owed by the insolvency administrator for newly established employment relationships after the notification of insufficiency.
The ranking under insolvency law – Basic understanding and relevant questions
Systematic classification of claims
Insolvency law distinguishes between several ranking classes of creditor claims: At the top are insolvency creditors, whose claims arose before insolvency proceedings were opened. Above them in priority are estate creditors, in particular liabilities arising after the opening of proceedings (§ 55 InsO). Separate, however, are new estate liabilities arising after the notification of asset insufficiency, whose preferential treatment does not warrant their complete equation with regular estate liabilities.
No change of rank due to new insufficiency of assets
According to the BAG – as confirmed by the aforementioned decision – the statutory ranking remains unchanged even if there is new insufficiency of assets. After the occurrence and notification of insufficiency, the new insufficiency of assets does not lead to a reclassification of already-arisen claims. Claims that previously existed against the estate do not receive a new ranking under insolvency law and must still be treated according to § 209 InsO. This draws a clear line against subsequent changes to the creditor hierarchy.
Effects on employee claims and practical consequences
Relevance for wages and post-contractual claims
This legal situation has substantial consequences especially for employees of insolvent companies. The BAG decision particularly concerns the classification of wage claims that arise after the occurrence of asset insufficiency. The registration and enforcement of these claims depend on whether they qualify as old estate or new estate liabilities. Existing claims that arose before the occurrence of new insufficiency of assets are neither upgraded nor do they receive special priority.
Significance for corporate practice and future contract structuring
For companies and creditors who provide or receive services after the notification of new insufficiency of assets, thorough risk assessment remains crucial. The BAG decision specifies that new contracts and obligations entered into with respect to the insolvency estate require special attention. Contractual partners and service providers should always document the timing of the notification of asset insufficiency in order to file any claims in a timely manner and meet risk-based procedural requirements.
Legal assessment and conclusion
The BAG’s clarification increases legal certainty regarding the classification and enforcement of claims in insolvency proceedings. The restrictive interpretation prevents any subsequent change in creditor ranking arising solely from the occurrence of new insufficiency of assets and thus serves the principle of legal clarity and procedural certainty. The insolvency law framework is thereby consistently followed and remains protected against later manipulation. In practice, this means that claims must be carefully examined and properly documented in each individual case.
Sources: Federal Labour Court, judgment of 25.08.2022, Ref.: 6 AZR 441/21; § 55, § 208, § 209 Insolvency Code; relevant academic literature.
For companies, investors, and other economic stakeholders affected by questions regarding the insolvency treatment of claims or the occurrence of asset or new insufficiency of assets, it is advisable to have their individual situation professionally assessed. For further legal questions in this area, the attorneys at MTR Legal are at your disposal.
