With decision of 27 October 2022, the German Federal Court of Justice (BGH) decided a long-running dispute under German insolvency law. This is significant not only in insolvency proceedings, but also in collateral valuation, restructuring planning and pre-insolvency contract drafting.
In its decision IX ZR 145/21, the Court assumed that the realisation right of the insolvency administrator under section 166 of the German Insolvency Code (InsO) does not extend to other rights. This settles a long-standing and intensively fought dispute as to whether, in addition to movable property in the administrator's possession and assigned claims, the right of realisation also extends to other rights such as, in particular, pledged company shares or assigned or pledged IP rights.
Such a right of realisation had been strongly advocated in particular by insolvency administrators in order to enable a realisation of the company’s assets from one source and to escape (justified or unjustified) realisation pressure of the secured creditors. Conversely, the withdrawal of the realisation right represented a significant interference with the secured creditor's contractual rights, and its justification was disputed on the basis of an analogous application of section 166 InsO. The BGH rejected the analogous realisation right by arguing that there was no unplanned regulatory gap. Fortunately, the Court clarified that this does not only apply to the pledged trade mark rights affected in the particular case, but that there is generally no room for an analogous application of section 166 InsO to other rights.
The decision - especially in conjunction with another decision of the senate from the same day (IX ZR 213/21) on ipso facto clauses - is quite intriguing because it shows the willingness of the insolvency law senate of the Court, which was essentially newly constituted about three years ago, to set new impulses in insolvency law and to clear up long-standing disputes. Regardless of whether the decision is welcomed in terms of its content, the senate has in any case succeeded in creating greater legal clarity.
Review of BGH 27.10.2022 IX ZR 145/21
For a more detailed overview, please also refer to the authors' article in GRUR (GRUR-Prax 2023, 116).
Authored by Christine Borries and Bastian Englisch.