Thorsten Hunsalzer
by Thorsten Hunsalzer
Thorsten Hunsalzer is an attorney, specialist solicitor for insolvency law, managing partner and associate at Gehrke Econ, and a former insolvency administrator. He has almost 20 years’ experience in corporate restructuring, turnaround, M&A and due diligence. His focus is on avoiding insolvency proceedings. Contact Thorsten.
Principle of equal treatment of creditors
From the opening of insolvency proceedings, the majority of creditor claims are treated equally. Insolvency voidance shifts this period forward. According to this law, creditors who specifically had knowledge of their debtor's illiquidity must return to the insolvency administrator any satisfactions and securities received. The resulting unpaid claim can only be filed in the insolvency table and will be satisfied proportionately.Insolvency voidance against foreign creditors
Compared to other countries, Germany has the toughest rules for insolvency voidance. Due to continually expanding international markets, the number of insolvency voidance cases is expected to increase abroad. Foreign creditors are often horribly surprised when they are flagged by a German insolvency administrator for repayment of payments they have painstakingly received.
Help from the Court of Justice of the European Union (CJEU)
The CJEU has strengthened the rights of foreign creditors with regard to Art. 16 EuInsVO by judgment of 22.4.2021, C-73/20. According to this the German insolvency administrator can indeed sue before a German court. But the law of the state in which the creditor is domiciled can be applicable. This insolvency voidance law is almost always better for the creditor. This applies to the statute of limitations (e.g. Austria) or the general claim requirements. The transferability of the case law of the CJEU to non-EU countries has not yet been finally discussed.
Advice for action
For the affected creditor it is worthwhile to check the relevant court location and applicable law according to the requirements of the German and European courts. A creditor wishing to avoid an insolvency voidance may consider in advance whether to agree with the debtor that the law of its country will apply. International insolvency voidance is a classic case of cross-border cooperation between law firms.
Gehrke Econ Group offers tax consulting, auditing, legal advice, and business consulting from a single source. It is owner-managed and advises medium-size companies at eye-level. Over two hundred employees carry out interdisciplinary consulting projects.
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