Insolvency Challenges In Case Of Instalment Payments Agreed Within The Scope Of Enforcement Proceedings

Author:Mr Stephan Neubauer
Profession:SKW Schwarz

In some areas, the 2017 insolvency challenge reform provided creditors with better protection against insolvency challenges by insolvency administrators. This applies in particular to instalments and other deferred payment terms arranged with business partners. Initial court decisions have been issued in the meantime. Clarification was also provided relating to instalment payments, which were frequently arranged by bailiffs within the scope of enforcement cases.

The Federal Court of Justice's rampant jurisdiction had in part led to tremendous challenges by insolvency administrators. In the event of the insolvency of suppliers or other service providers, companies were forced to make high repayments of funds already received, particularly in the case of frequently customary instalment payment arrangements. Under certain circumstances, insolvency administrators were able to contest amounts received for up to ten years retroactively. This period has now been reduced to four years.

Some companies had started to have their customers' payment arrears recognized and enforced very promptly by means of enforcement orders or court judgments, thus limiting the insolvency challenge risk to three months. The Code of Civil Procedure, on the other hand, requires bailiffs to work towards amicable settlements and payment arrangements. Any amounts paid within the scope of such payment arrangements were again contestable by insolvency administrators, however.

Following the 2017 insolvency challenge reform, the legislator reversed the burden of proof and stipulated that creditors that granted their debtors deferred payment terms or concluded payment arrangements with them are presumed not to have been...

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