Mr Stefan Sax Partner Clifford Chance LLP - Lawyer biography - International Law Office

International Law Office

Stefan Sax

Mr Stefan Sax

Published updates

Insolvency & Restructuring

Suhrkamp has made legal history by initiating insolvency protection proceedings. It is at the centre of a power struggle between its two rival shareholders, which are attempting to wrest control over its business operations. The proposed insolvency plan provides for transformation from a limited commercial partnership into a German stock corporation. The dispute is unlikely to be resolved in the foreseeable future.

Contractual trust agreements are often used by German companies to set up a pension scheme in a tax-efficient manner to protect pension claims in the event of an employer's insolvency. A recent court decision shows that for a contractual trust agreement to be upheld, it is essential to properly implement all elements of the twofold trust into the underlying trust agreement.

The Federal Ministry of Justice recently published a discussion paper on the Act for the Facilitation of the Management of Corporate Group Insolvencies. The paper proposes the introduction of rules to enhance the coordination of multiple insolvency proceedings in domestic group settings.

The Duisburg Regional Court recently ruled that an insolvency court can empower the insolvency debtor to incur certain predetermined preferential claims. The decision will help to shape prevailing opinion after several local insolvency courts arrived at divergent rulings. For now, debtors should seek constructive dialogue with the competent local insolvency court before filing the petition for the opening of insolvency proceedings.

The Federal Supreme Court recently underlined the importance of commercial considerations in the context of insolvency avoidance rules regarding the repayment of shareholder loans. The court explicitly outlined that a commercial approach is required in order to prevent any potential strategies to structure around the German principles of equitable subordination.

The Federal Supreme Court recently ruled that a termination clause was invalid pursuant to Section 119 of the Insolvency Code, as it was based on an insolvency-related termination event which limited the insolvency administrator's right to choose whether to perform the supply contract in accordance with the code. The court's judgment is likely to cause suppliers to monitor the financial situation of their customers more carefully.

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Securitisation & Structured Finance

Irrespective of certain weaknesses that German restructuring and insolvency law may have, creditors whose claims are secured by land charges can nevertheless choose between several feasible possibilities for realising encumbered real estate. German law tends to be somewhat reluctant to allow creditors to grasp direct control of real estate. As such, the Federal Ministry of Justice's recent proposals should be welcomed.