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The 11th senate of the German Federal Supreme Court again had to deal with the duties of a bank recommending interest rate swap agreements. In this context, the German Federal Supreme Court re-affirmed on 22 March 2016 – XI ZR 425/14 – its position that a bank dealing with a customer interested in the conclusion of an interest rate swap has a core duty to advise this customer. In this context, the bank also has…
This post was also written by Artur Korn. German insolvency law, unlike US insolvency law, only recently introduced (in 2012) the so-called protective shield proceedings (Schutzschirmverfahren) to enable potentially illiquid and/or over-indebted debtors to restructure the company on the basis of a so-called insolvency plan. Thereby, the liquidation of a company by a future insolvency administrator can be avoided. In general, protective shield proceedings are fairly comparable to US Chapter 11 proceedings. However, comparable to…
This post was also written by Artur Korn. If you are a creditor of an insolvent German company, you may have come across the following difficult phenomenon: your contractual counterparty is unable to pay outstanding debts when they become due. In order to maintain the business relationship you could agree to terms of payment entitling your contractual counterparty to pay its debts by instalments. However, after a period during which the debtor pays the instalments…
“Ipso facto”: The concept that clauses allowing for the termination of contracts purely for the insolvency of the contractual counterpart should be invalid, has long been an established principle of the Chapter 11 regime in the US.  However, in another example of trend suggesting that this approach may also be increasingly adopted in European jurisdictions where previously such clauses have been relied upon, Christian Stempfle of our Munich office provides an update on German case…