If executives are suspected of having enriched themselves at the expense of the company, a criminal liability according to § 266 StGB (“Strafgesetzbuch“, German Criminal Code) is regularly brought into play. Since two fundamental decisions of the German Federal Constitutional Court (“Bundesverfassungsgericht“, “BVerfG“) in 2010 and 2012, however, the courts have been considerably more hesitant with a corresponding conviction. This tendency is exemplified by the recent decision of the LG Hamburg to discontinue the proceedings against the imposition of money charges (here) despite the previous annulment of the acquittals against various bankers of the failed HSH Nordbank, and by a recent decision of the Berlin Court of Appeals (“Kammergericht“, “KG“) which cleared three former functionaries of the Kassenärztliche Vereinigung (a body of medical professionals organising the payment processes for the profession) of the allegation of breach of trust (here).
The German economy in May 2019 – severe cracks
It seems that the silver lining at Germany’s economic sky in March (here) and April (here) were indeed nothing more than the lights of the (recessionary) train advancing fast. Already a superficial review of Germany’s economic data shows some severe cracks in the success story of the last years – although it still stands to question whether an actual downturn is already “around the corner”. Still some indicators (insolvencies, ZEW) are positive:
BGH on the creditor’s knowledge of a turnaround concept
In a recent ruling of the German Federal Court of Justice (“Bundesgerichtshof“, “BGH“, the BGH continues a decision from 2016 (see here) according to which a serious, albeit ultimately unsuccessful, attempt to restructure the debtor can dispense with both the creditor’s intention to discriminate against the debtor and the opponent’s knowledge of this intention – and thus barr an avoidance action.
Whistleblower – between a rock and a hard place
It doesn’t have to be the so-called “Panama papers” or the documents on “Luxembourg leaks” that fall into the employee’s lap – often unintentionally and rather accidentally. But how should an employee behave if s/he becomes aware of irregularities in the company? Given the potentially far-reaching consequences of (unreported) irregularites, the question “What does this concern me?” seems to be rather misplaced for managing directors as well as for ordinary employees alike. In the following, I would therefore like to make a few comments and give some hints as to the “correct” behaviour in the event of irregularities within a company.
The German economy in February 2019 – disappointing early indicators
In February 2019, the German economy – if not paralysed (as in the last month, cf. here) – presented disappointing early indicators such as orders and production while other (rather lagging) indicators such as unemployment or corporate insolvencies still show record-low-levels. Let’s look at the development in more detail:
CRO’s liability in DIP-procedures
Not surprisingly, at least for the experts, the German Federal Civil Court (BGH) decided in April 2018 that (at least) the “Chief Restructuring Officer” (CRO) (“Eigenverwalter” = managing director responsible to guide the company through the DIP-insolvency procedure) is liable in the same way as an insolvency administrator for contracts concluded with creditors while under insolvency protection.
Brexit and no “Deal” in sight – what to do now
The “Brexit”, i.e. the formal withdrawal of Great Britain from the European Union, due to take place at midnight on 29 March 2019, is not only casting its shadows in company and insolvency law. In view of the current, rather confused situation, companies can no longer wait for the outcome of the negotiations between the United Kingdom and the European Union. The time needed to implement measures that have been identified as relevant means that they must act now – and actually they act, as the example of the car manufacturer Honda shows, who wants to close down his English plant completely – probably also against the background of a free trade agreement between the EU and Japan (here).
The following article examines the current political/economic situation in order to derive general recommendations and concrete consequences for the (resilient) preparation of companies in the area of company and insolvency law.
The German economy in January 2019 – Paralysis?
Although indications that the German economy ended 2018 in negative territory kept piling up (cf. here for the previous month), the sentiment indicators’s downward path of earlier months accelerate in sync with the industrial production and orders, Destatis just announced that the German economy “only” stalled in the last quarter of 2018. Let’s look at the development in more detail: