Bankruptcy of debtor payments on a consolidation loan

The conditions for insolvency contravention of payments by the debtor on a consolidation loan were currently dealt with by the Superior Court of Appeals in Berlin:

According to section of the Insolvency Act, a legal act which the debtor has made in the last ten years prior to the application for insolvency proceedings or after this petition with the intention to discriminate against its creditors is contestable, if the other part is currently the act knew the intention of the debtor. This knowledge is presumed when the other party knew that the insolvency of the debtor threatened and that the act disadvantaged the creditors.

Objective creditor disadvantage

Due to the debtor’s payments to the creditor, the insolvency creditors were objectively disadvantaged.

A disadvantage within the meaning of Anso exists if the satisfaction of the insolvency creditors is shortened (reduced), thwarted, aggravated, endangered or delayed. It must therefore be stated that the satisfaction of the creditors is more favorable in the event of failure to comply with the contested act 1. These conditions are present here, because the payments to the creditor reduce the assets of the debtor and thus the creditors’ access to their assets has been thwarted 2.

Disadvantage of the debtor

The debtor acted in making the payments with the intention to disadvantage their creditors.

Disadvantage of intent is when the debtor, when executing the act, wanted the creditors to be discriminated against, or in any case recognized and approved them as a presumed consequence of his actions, even as an undesirable by-product of another intended benefit 3. If the debtor grants the counterparty a congruent cover, ie only what the claim was entitled to, then proof of the intention to disadvantage must be increased. In such a case, the debtor usually wants to pay only his debts. However, according to the settled case-law of the court, the debtor has then carried out the contested act with the intention of disadvantaging him if, at the time of its effectiveness was insolvent 4.

insolvency

insolvency

The debtor was insolvent at the time of the payments.

Insolvency is a debtor who is unable to meet the due payment obligations. Insolvency is generally to be assumed if the debtor has ceased his payments.

In the present case, the debtor had already suspended payments before the first payment because she was unable to settle the liabilities due.

According to the case law of the Federal Court of Justice, insolvency can be assumed if the liquidity gap of the debtor, which can not be eliminated within three weeks, amounts to at least 10% of its total liabilities due 5. These conditions were already given in April 2006, according to the stated low coverage ratio.

Once a payment has ceased, it can only be remedied by the debtor resuming payments altogether 6. This was not the case here.

Knowledge of the creditor of the deprivation of intent

A contestation for intentional creditor disadvantage according to § 133 Abs. 1 Anso further presupposes that at the time of the contested act the contestant knew of the intention of the debtor to discriminate against his creditors. This knowledge is suspected under sentence 2 Insolvency Act if the respondent knew that the insolvency of the debtor was threatened and that the respective act disadvantaged the creditors.

According to the case-law of the Federal Court of Justice, it is sufficient for the presumption of knowledge of the intent to deprive the opponent, if the opponent knows of circumstances from which the (imminent) insolvency follows without doubt with appropriate legal assessment 7. Knowledge of the impending insolvency is generally to be assumed if the obligations of the debtor in the subsequent contestant are not constantly compensated for over a long period of time to a considerable extent and the circumstances in which it is known that there are other creditors with unsecured claims 8.

The extent to which the claimant has been burdened with evidence and evidence 9 has not sufficiently refuted the presumption of knowledge of the intention to disadvantage. Nothing can be deduced from the purported loan commitment of € 300,000.00 by the parent company. Because the creditor has not commented on how secure the asserted commitment was and in what timeframe this should have been implemented.

Insofar as it is pointed out that serious remedial attempts would speak against a knowledge of the creditor of a creditor disadvantage intent, that is not to follow. It is true that a proper restructuring attempt can exclude the direct creditor disadvantage. However, this only applies if the remediation attempt – although identifiable by the debtor – involves risks, but the efforts to rescue the company are very much in the foreground and a positive prognosis seems reasonable and justifiable on the basis of concrete circumstances 10, Regularly, a coherent, on the individual case related restructuring concept is to be presupposed, that at least in the beginning already put into action and as a result on the side of the debtor at the time of the legal action serious and justified prospect of success within a reasonable time is justified 11. Such remedial attempts at the time of the December 2006 act are not substantiated here.

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