Two Major Problems In Dealing With Fraud Cases In Germany

Author:Mr Hansjörg Scheel
Profession:Herbert Smith

When dealing with fraud, parties in Germany face two major problems: how to discover what assets the debtor has, and how to rescind fraudulent conveyances.

In fraud and asset tracing cases, the first goal is to obtain a Writ of Attachment which allows for pre-judgment seizure of the debtor's assets. However, since such seizure is a material restriction for the debtor, the Writ will only be granted if specified grounds can be proved. Such grounds are, for example, criminal offences against the creditor's property, wasteful spending, and imminent transfer of assets abroad.

If no Writ of Attachment has been issued, the creditor must file an action in order to obtain a judgment as soon as possible. If the claimant relies entirely on documentary evidence, it could file a special summary procedure. Since the average time period until a judgment is granted varies considerably between the German Courts, it might sometimes be useful to investigate in detail whether another German Court has jurisdiction. In general, Courts in the Southern part of Germany come to a quicker decision.

Time is frequently one of the most important factors since dubious debtors often make tremendous efforts to conceal or transfer their property. If a judgment is granted in favour of the creditor, and if the debtor is suspected of having concealed or transferred its assets, an application could be filed with the enforcement Court that the debtor should be ordered to disclose his assets. The creditor has to enclose with such application the relevant judgment and a Bailiff's Certificate stating that the debtor does not possess sizeable, moveable property (nulla bona). In practice, it is useful to have some personal contact with the bailiff, even by phone. Otherwise, it might take considerable time until such certificate is available since the bailiffs are nowadays inundated with work.

If the bailiff has issued a nulla bona certificate and the creditor has filed an application, the debtor will be ordered by the enforcement Court to fill in one or more forms. The debtor has to disclose every item of moveable property, no matter whether it is exempt from execution or whether he or a third party has actual possession. The debtor must state all his money claims, naming his debtors and giving the foundation of their claims, and must disclose the name of his current employees and their...

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