English Part 26A Restructuring Plans no longer recognised in Germany in respect of German law governed debt held by German creditors

In a judgment of 9 July 2025 the Landgericht Frankfurt am Main (District Court of Frankfurt am Main) held (case 2-12 O 239/24) that a Part 26A plan sanctioned by the English High Court is not enforceable in Germany and that accordingly the affected German dissenting lender was entitled to sue the plan company, i.e. the borrower, for repayment of a EUR 5,000,000 loan owned to it by the plan company.  Although the terms of the Part 26A plan had extended the due date of the loan from 28 November 2023 to 28 November 2025, and although that plan was sanctioned by the English court, the plan was not recognized in Germany.

However, the judgment of the Frankfurt German court is not yet final because it was made in the course of so-called “Urkundsverfahren” (documentary proceedings), i.e. a special German court proceeding in which a fulllegal review of the law is done, but which is based only on facts which are either undisputed between the parties or proven by way of written documents. The losing party can either apply for full ordinary proceedings at the relevant court (here, the Landgericht Frankfurt am Main) or choose to directly appeal such judgment to the next higher court, i.e. in this case, the Oberlandesgericht Frankfurt am Main (Higher Regional Court of Frankfurt am Main) or they can take both routes at the same time.   In this case, the losing party has chosen to take both routes.

The key considerations of the German court in the documentary proceedings were the following:

1. The judgment related to a EUR 41,000,000 German law governed syndicated senior loan facility extended to a Luxembourg S.a.r.l. as borrower and made for the financing of a property in Germany. Even though the EUR 41,000,000 Senior Loan Agreement was a syndicated loan, the German dissenting lender was allowed under the terms of the loan agreement to claim for itself the payment of its portion of the loan, because it validly terminated the majority voting principles. The court held that the German dissenting lender was entitled to terminate the majority voting principle, because the other lenders were in default by breaching the principle of unanimity for important decisions of the lenders having disregarded the claimant’s rejection of the Part 26A plan.
   
2. The High Court sanction of the Part 26A plan was not a decision in an insolvency proceedings which would have been to be recognised under Section 343 (1) 1 of the German Insolvency Code, because an “insolvency proceeding” for such purposes is only a proceedings which encompasses all creditors, and in the Part 26A proceedings only the senior lenders were involved.
   
3. The court further held, that on the basis of the facts which were undisputed between the parties or proven by written documents, the sanctioned Part 26A plan cannot be recognised under Section 328 of the German Code on Civil Procedure (ZPO), because such recognition requires reciprocity between Germany and the UK and such reciprocity had not (yet) been proven by written documents. Such reciprocity could be proven through, for example, an expert opinion, but such an expert opinion is not a “written document” for the purposes of the Urkundsverfahren (documentary proceedings).
   
4. The German court further pointed out that there is no recognition of the UK court’s sanctioning of the Part 26A plan pursuant to Article 26 of the Brussels Convention on the Recognition of Judgments, because the Brussels Convention was replaced by the Brussels Regulation on the Recognition of Judgments and that EU Regulation does not apply to the UK any longer after Brexit and Brexit did not result into a revival of the Brussels Convention.
   
5. The court did not discuss a recognition of the decision of the High Court by German courts under the European Insolvency Regulation (Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings) or the new German rules on restructuring proceedings under the German Act on the Stabilisation and Restructuring Framework for Enterprises (Gesetz über den Stabilisierungs- und Restrukturierungsrahmen für Unternehmen „StaRUG“), because those provisions do not provide for a recognition of non-EU court decisions in Germany.
   
6. The court did also not discuss a recognition of the decision of the High Court under the 2007 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the “Lugano Convention”). We assume that this was not done because even though the United Kingdom had applied on 8 April 2020 to accede to the Lugano Convention, the EU Commission rejected such application in a communication of 4 May 2021 to the European Parliament and the Council and notified that position to the Lugano Depository in July 2021 so that the UK has not become a party to the Lugano Convention. Further, the court did also not discuss a recognition of the decision of the High Court under the Treaty of 14 July 1960 between the UK and Germany on the mutual recognition and enforcement of judgments. We assume that such Treaty was not considered, because it was terminated through Article 55 of the 1968 Brussels Convention on Jurisdiction and the Enforcement of Judgments when the UK acceded to that convention in 1982.
   
7. The court also did not discuss a recognition of the decision of the High Court by German courts under the Hague Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters. We assume that this was either not discussed because it was thought that such Convention did not yet apply in the relationship between the UK and Germany since the Part 26A procedure was started prior to 1 July 2025, or because a recognition thereunder would, if that Convention had in principle applied, have required that the German dissenting lender was situated in the UK or otherwise accepted or consented to the jurisdiction of English courts.

The decision, as it stands, is significant, given its impact on both German creditors and Part 26A plans but in a sense the judgment is only an “interim” decision, as we understand that the losing party may have (i) appealed against the judgment of Landgericht (local court) Frankfurt am Main on points of law which the Higher Regional Court of Frankfurt (Oberlandesgericht Frankfurt am Main) would consider, and (ii) applied for full proceedings, to the Landgericht (local court) Frankfurt am Main where the question of reciprocity would be considered. If this is the case, we expect there will be a further judgment shortly addressing these questions.

If the defendant does attempt to prove in full ordinary German court proceedings, they would need to show that there is reciprocity and that English courts would recognise German judgments akin to a Part 26A plan. However, this might be hard to prove because of the Rule in Gibbs (Antony Gibbs & Sons v La Société Industrielle et Commerciale des Métaux (1890) LR 25 QBD 399) which prevents the discharge or variation of English law governed claims by a foreign insolvency or restructuring process. Under the Rule in Gibbs and as a matter of English law, only the governing law of a contract may validly discharge or amend the contract. The key issue here is that an English court by sanctioning the Part 26A plan changes the terms of a German law governed loan agreement, but by reason of the Rule in Gibbs a German process cannot do the same in respect of debt governed by English law. How hard the issue of reciprocity will be to prove will depend on whether German courts will take a very case specific approach or a more lenient generic approach on “reciprocity”.