Initial Situation and Subject Matter
Account balances frozen due to the so-called Russia sanctions regularly stand at the intersection between sanctions law prohibitions on disposition and civil or insolvency law access options. A decision by the Higher Regional Court of Frankfurt am Main dealt with the question of whether such “frozen” balances become available for free insolvency-related disposition with the opening of insolvency proceedings over the account holder’s assets or whether the freeze continues to apply.
Legal Framework of Account Freezing under Sanctions Law
Freezing of Funds as a Prohibition on Disposition
Sanctions law measures can result in funds and economic resources no longer being allowed to be moved, transferred, or otherwise made available. The “freezing” is therefore not primarily aimed at a transfer of ownership but at preventing any disposition over the affected assets. For credit institutions, this typically means that payouts and other dispositions over the affected account must be refrained from.
Relationship to Civil Law Claims
Even if civil law positions – such as claims from the current account or banking relationship – fundamentally remain, their actual enforcement may be blocked by the sanctions law prohibition. In conflict situations, the question arises as to whether and to what extent insolvency law mechanisms can nevertheless open up such access.
Insolvency Proceedings and Access to Frozen Assets
Effects of the Opening of Proceedings
With the opening of insolvency proceedings, administrative and dispositional powers generally pass to the insolvency administrator. The insolvency estate is to be secured and realized equally in favor of creditors. This can create a conflict if assets are indeed attributable to the debtor, but due to overlapping public law prohibitions, they may not be moved.
Core Assertion of the Decision by the Higher Regional Court of Frankfurt am Main
According to the decision by the Higher Regional Court of Frankfurt am Main, the sanction-related freeze of the account balance continues to exist even after the opening of insolvency proceedings. The opening of proceedings does not automatically make frozen funds “free” or allow the insolvency administrator to dispose of them at will. The key is that the sanctions-related freezing works as a binding prohibition on disposition and insofar limits insolvency-related powers of disposition.
Interpretation of the Decision
Primacy and Continued Effect of Sanctions Law Prohibitions
The decision clarifies that insolvency-related aggregation of assets is not intended to neutralize sanctions law prohibitions. The freezing continues to prevent any disposition, regardless of whether the insolvency administrator takes the place of the debtor. Therefore, credit institutions remain bound to sanctions law requirements, even if another person is appointed for management under insolvency law.
Significance for Credit Institutions and Parties Involved in Proceedings
For banks and other obligated parties, this means that the release of frozen account balances cannot be justified solely with the opening of insolvency proceedings. For insolvency proceedings with sanctions law relevance, the decision also shows that the realization of assets may be permanently blocked by public law restrictions as long as the relevant measures continue to exist.
Note on the Source
The above statements are based on the reporting on the decision by the Higher Regional Court of Frankfurt am Main, published at: https://urteile.news/OLG-Frankfurt-am-Main_17-U-2025_Wegen-der-sog-Russland-Sanktionen-eingefrorene-Gelder-bleiben-auch-bei-Eroeffnung-des-Insolvenzverfahrens-ueber-das-Vermoegen-der-Kontoinhaberin~N35885.
Contact for Questions Related to Frozen Account Balances
Sanctions-related account freezes can practically affect payment transactions, account management, and the handling of balances in crisis and insolvency situations. If legal questions need to be clarified in the relationship between account holder, insolvency bodies, and credit institution, an assessment can be made within the framework of a Legal Advice in Banking Law provided by MTR Legal Lawyers.
