Germany has notoriously broad voidability laws. As a rule of thumb, any payment by a third party has high voidability risks if the third party has no obligation to make the payment under the contract. Such payments qualify as incongruent (3 months hardening period, very few further requirements) and often qualify as gratuitous (4 years hardening period, without any further requirements). A recent decision of the German High Court has stirred hope that the Court may give some leeway to cash pool payments by group companies. However, on a closer look at the decision, it becomes clear that the boundaries for an exemption from voidability were set very narrowly.

Comment on the German High Court decision dated 12. September 2019 (file no.: IX ZR 16/18) by Christine Borries, LL.M. (Sydney) and Dr. Markus Huber, lawyers of the German Hogan Lovells insolvency and restructuring practice.
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The development of new powertrain technology; challenges within established markets, such as diesel emissions issues; and falls in automotive production – production in the United Kingdom has fallen during the last 12 consecutive months – have all had a significant impact on the automotive and mobility industry.  The rapid increases in demand for connected, electric, and hybrid vehicles – together with the associated infrastructure – means that effective cooperation among OEMs, suppliers, regulators, and other stakeholders is now more important than ever. The cost of this new technology, aligned with shocks to production, such as the ongoing uncertainties around Brexit and China trade tariffs, means that more than ever, fortune will favor the innovative and the well prepared innovator.

Hogan Lovells partners Joe Bannister (UK), Heiko Tschauner (Germany), and Chris Donoho (U.S.) are part of the firm’s Business Restructuring and Insolvency practice. Bannister and his colleagues have a wealth of experience acting for original equipment manufacturers (OEMs) and suppliers in some of the most complex and intractable automotive cases of the past decade.  In this article they discuss the challenging issues that arise when an OEM is faced with a distressed supplier, and what can be done to mitigate the resultant risks.


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The Preventive Restructuring Frameworks Directive (EU) 2019/1023 is finally in force. Following its implementation into EU member states’ national law, the directive will hopefully prove an effective tool for Europe’s restructuring practitioners, just as the continent’s economic outlook darkens.
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Recently the German legislature passed a new law, exempting extraordinary profits created by the waiver of claims under restructurings from income tax liability. The amendment was necessary because the German Federal Tax Court had previously held the original administrative decree (which in a conceptually different manner avoided the tax burden on such profits) unlawful. This article gives a brief overview over the legislative history and the practical consequences of the amendment.
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Rather surprisingly on 16 February 2017 the German Parliament finally executed a long discussed reform of the German insolvency code aimed to soften the law on voidable transactions. The law now needs to pass the federal council (Bundesrat) before it can become effective.  Continue reading

In a fundamental decision the Grand Senate of the German Federal Tax Court (Bundesfinanzhof – BFH) has nullified the Restructuring Decree of the German Federal Ministry of Finance. According to the BFH the Restructuring Decree went beyond the tax authorities’ legal competences and was therefore unlawful. The court found that a general regulation regarding