Concept and legal classification of the preferential action
Die Preferential action is a legal term from the area of civil procedure law and describes a special type of lawsuit that arises from the principle of equal treatment in bankruptcy and insolvency proceedings. It refers to a lawsuit that a creditor is entitled to bring under certain statutory conditions, in order to enforce preferential satisfaction of their claims over other creditors. The preferential action occupies a special position among creditor actions, as it is only possible if specific legal conditions are met.
Systematic position in insolvency law
Insolvency proceedings and creditor status
In insolvency law, the principle of equal treatment generally applies, whereby all creditors are to participate proportionally in the insolvency estate (§ 1 InsO). For reasons of creditor equality, individual creditors are generally prohibited from acting separately against the debtor. However, the law provides exceptions in cases where creditors are granted separation, segregation, or certain preferential rights.
Distinction from actions for separation and segregation
To be distinguished from the preferential action are the action for separation (action of an owner seeking the return of their property) and the segregation action (assertion of security interests in the insolvency estate). The Preferential action by contrast, grants the suing creditor a preferential right to sue, for example, on the basis of a statutory lien or a pre-insolvency privileged claim, and aims at preferential satisfaction.
Requirements and scope of application
Legal requirements for a preferential action
A preferential action is only permissible if the following conditions are cumulatively met:
- The plaintiff must have a claim with a statutory preference (such as a lien, preferential rights under tax law, or priority rights under social insurance contribution law).
- The relevant claim must be due and enforceable.
- No general enforcement prohibition may oppose the preferential right (especially in insolvency according to §§ 89, 166 Insolvency Code).
- The asserted claim must not already have been registered and examined in the course of the insolvency proceedings, or, due to its preferential nature, must be permitted to be pursued separately.
A typical example is the action of a social insurance institution for preferential satisfaction of its contributions in insolvency proceedings.
Practical examples and typical case scenarios
The preferential action is typically applied in cases involving:
- statutory liens, such as those of landlords under § 562 BGB,
- contribution claims of social insurance in the event of insufficiency of assets pursuant to § 209 (1) No. 2 InsO,
- public-law tax debts with priority, especially in tax law (§§ 45 – 47 AO).
Procedural particularities
Standing to sue and type of proceedings
The preferential creditor generally has the right either to file their claim by registering it in the insolvency schedule or, where the law allows, to assert it separately by means of the preferential action. In proceedings outside of insolvency, the preferential action is usually structured as a normal performance action, with the special feature that the preferential right, including its scope and priority, must be specifically substantiated and proven.
Relationship to the insolvency administrator and other creditors
In the case of a preferential action in insolvency proceedings, the action is usually brought against the insolvency administrator as the representative of the estate. The insolvency administrator is obligated to maintain the equal treatment of all insolvency creditors, so preferential rights must be strictly substantiated. The preferential action may impair the rights of other creditors since the suing creditor achieves an advance or increased satisfaction compared to the other creditors.
Legal consequences and enforceability
If the preferential action is successful, the plaintiff is granted priority over other insolvency creditors to the extent of their preferential right. Satisfaction is then made from the insolvency estate either in advance or with a higher quota claim. Enforcement can only occur after mass liabilities have been settled; enforcement access is only possible once the preferential right and ranking have been conclusively established.
Significance and practical implications
Protection of the legitimate interests of preferred creditors
The regulation of the preferential action is intended to protect the legitimate interests of certain creditors who are granted priority over the general class of claims by law. In insolvency law, this ensures the legally secured satisfaction of estate creditors or otherwise privileged claims, thereby safeguarding the functionality of certain social, tax, or social insurance structures.
Risk of abuse and the possibilities for intervention
As the preferential action is an exception to the principle of equal treatment of creditors, abuses must regularly be curtailed by the court and the insolvency administration. This is achieved not only through the creditor’s obligation to prove the existence of the preferential right, but also through (judicial) review of the conditions and the amount of the preferential claim.
Summary
The preferential action occupies a special role in insolvency and civil procedure law, as it grants holders of statutorily privileged claims their own right of action aimed at priority. It serves to enforce special preferential rights and exists in the tension between maintaining the principle of equal treatment and protecting priority claims. The legal requirements for the preferential action are to be interpreted strictly and are subject to independent procedural treatment. When properly applied, it achieves a balanced compromise between creditor protection, insolvency law systematics, and socially relevant interests.
Frequently Asked Questions
When and by whom can a preferential action be brought?
A preferential action can generally be brought in certain corporate law situations in which individual shareholders are granted a special right or standing to sue against the company or other shareholders. In German law, this typically applies to stock corporations, where, for example, shareholders with preference shares may, under certain conditions, be entitled to bring an action—such as for dividend distribution or damages—on a preferential basis (in the sense of a special interest in legal protection). The possibility of filing a preferential action is set out in the articles of association, shareholder agreements, or directly by statute. The prerequisite is always that the suing shareholder is affected by a grievance or legal violation that specifically relates to the preferential right and that the violation could not be remedied by the general meeting of shareholders or the company’s bodies.
What requirements must be met for a successful preferential action?
For a preferential action to be admissible and successful, various legal requirements must be satisfied. It is absolutely necessary that the suing shareholder is entitled to a subjective right of action based on the respective preferential right (e.g., preferential dividend payment, special voting rights, or other privileges). The relevant articles of association or special statutes often also stipulate deadlines and formal requirements that must be strictly observed. For example, it may be necessary to exhaust certain internal dispute resolution mechanisms prior to filing suit, or to have first referred the dispute to the shareholders’ meeting. The asserted claim must also be unequivocal and demonstrable—this applies in particular to the causality between the alleged legal violation and the claimed loss or disadvantage.
Against whom can a preferential action be brought?
Depending on the legal basis and factual circumstances, the preferential action may be brought either against the company itself (e.g. against the stock corporation as a legal entity) or against its governing bodies or other shareholders. Typically, the action to enforce an impaired preferential right is directed against the company, but—under special circumstances—it may also be asserted against the executive board, supervisory board, or individual members of these bodies, if they are accused of misconduct or breach of duty that thwarted or delayed the enforcement of the preferential right. In some cases, joint litigation against multiple defendants is necessary.
What are the legal consequences of a successful preferential action?
If a preferential action is fully or partially upheld by the court, the defendant—usually the company—is obliged to grant the plaintiff the enforced right. Depending on the specific legal basis, this may be the payment of a due preferential dividend, the granting of special voting rights, or the removal of another disadvantage. If the court also finds misconduct by members of the company’s bodies, further legal consequences may arise, such as liability for damages or—in cases of gross violations—the removal of individual officers. In any case, the judgment favors the suing shareholder and may also benefit other holders of the same preferential rights.
What costs and risks are associated with a preferential action?
The preferential action involves the usual costs of civil litigation. These include court fees, expenses, and the legal fees for both parties, which are calculated pursuant to the procedural cost laws (especially the GKG and RVG). If the claim is wholly or partially dismissed, the plaintiff usually bears the entire procedural costs, as well as the opposing party’s legal fees. There is also the risk of a negative precedent being set, which could apply to similar future cases. If there is no legal expenses insurance covering the specific dispute, a considerable cost risk may arise.
Are there any deadlines that must be especially observed when filing a preferential action?
Yes, different limitation and other periods apply to the filing of a preferential action depending on the legal basis. Articles of association or special statutory provisions (e.g. in the AktG or GmbHG) often prescribe a cut-off period within which the action for the preferential right must be brought. Failure to comply with these deadlines could lead to a permanent loss of entitlement. In general, the regular limitation period under the German Civil Code (§ 195 BGB) is three years, commencing at the end of the year in which the claim arises and the plaintiff becomes aware of it or is grossly negligently unaware. In individual cases, the deadlines may be much shorter; therefore, careful review of the relevant articles of association and special statutory provisions is essential.
What role do arbitral tribunals or internal dispute resolution mechanisms play in preferential actions?
Many company articles of association include arbitration clauses or regulations for internal dispute resolution procedures, which may also apply to preferential actions. Before seizing an ordinary court, mandatory mediation or arbitration may be required. Only when these procedures have been unsuccessfully completed is recourse to the ordinary courts permissible. Observing such clauses is regularly a prerequisite for the admissibility of a preferential action, and disregard may result in dismissal of the claim. The specific scope and binding nature of the arbitration clause depend on the content of the relevant corporate agreement and the general provisions of the Code of Civil Procedure (§§ 1025 ff. ZPO).
