2. creditors entitled to separate satisfaction.

and sections 16 and 17 of the Act Governing

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Rights in Aircraft [Gesetz über Rechte an Luft-

Section 78 – Cancellation of a Resolution of the

fahrzeugen] remain unaffected. The considera-

Creditors’ Meeting

tion shall be refunded to the other party out of

(1)

If a resolution of the creditors’ meeting is con-

the insolvency estate to the extent that the insol-

trary to the common interest of the insolvency

vency estate is thereby enriched.

creditors, the insolvency court shall cancel the

(2)

Subsection (1) applies to a disposal of future

resolution if requested to do so at the creditors’

claims to emoluments due to the debtor under a

meeting by a creditor entitled to separate satis-

service contract, or to recurring emoluments re-

faction, a non-subordinated creditor or the insol-

placing them, insofar as the disposal also affects

vency administrator.

emoluments for the period after termination of

(2)

Cancellation of the resolution shall be published.

the insolvency proceedings. The right of the

Each creditor entitled to separate satisfaction

debtor to assign these emoluments to a trustee

and each non-subordinated creditor has the right

for the purpose of the collective satisfaction of

of immediate appeal against the cancellation.

the insolvency creditors remains unaffected.

The applicant has the right of immediate appeal

(3)

If the debtor has made a disposal on the day on

against the refusal of an application for cancella-

which proceedings are commenced, it shall be

tion of a resolution.

presumed that the disposal was made after the

commencement of proceedings. A disposal by

Section 79 – Provision of Information to the Creditors’

the debtor of financial collateral within the mean-

Meeting

ing of section 1 (17) of the Banking Act [Kredit-

The creditors’ meeting is entitled to request spe-

wesengesetz] after commencement of proceed-

cific information and a status and management

ings is effective notwithstanding sections 129 to

report from the insolvency administrator. If a cred-

147 if it takes place on the day of commencement

itors’ committee has not been appointed, the cred-

of proceedings and the other party proves that it

itors’ meeting may have the insolvency adminis-

was neither aware nor should have been aware of

trator’s monetary transactions and cash assets

the commencement of proceedings.

examined.

Section 82 – Performance in Favour of the Debtor

Part Three – Effects of Commencement of

If the debtor receives performance in settlement

Insolvency Proceedings

of a liability after commencement of insolvency

Chapter One – General Effects

proceedings, although the liability was to be set-

tled to the credit of the insolvency estate, the

performing party shall be discharged of liability if

Section 80 – Transfer of Right of Management and

it was unaware of the commencement of pro-

Right of Disposal

ceedings at the time of its performance. If perfor-

(1)

As a result of commencement of insolvency pro-

mance was effected prior to publication of the

ceedings the right of the debtor to manage and

order for commencement of proceedings, it shall

dispose of the assets of the insolvency estate

be presumed that the said party was unaware of

vests in the insolvency administrator.

the commencement of proceedings.

(2)

An existing prohibition of disposal imposed on

Section 83 – Inheritance. Continued Community of

the debtor that is only intended to protect par-

ticular persons (sections 135 and 136 of the Civil

Property

Code [Bürgerliches Gesetzbuch]) is of no effect in

(1)

If an inheritance or legacy has accrued to the

the proceedings. The provisions regulating the

debtor prior to commencement of insolvency

effects of an attachment or a seizure by way of

proceedings, or if this occurs during the proceed-

compulsory enforcement remain unaffected.

ings, the debtor alone is entitled to accept or dis-

claim such inheritance or legacy. The same ap-

Section 81 – Disposals by the Debtor

plies in relation to the rejection of continued

(1)

If the debtor has disposed of an asset in the insol-

community of property.

vency estate after commencement of the insol-

(2)

If the debtor is a prior heir, the insolvency adminis-

vency proceedings, the disposal is ineffective.

trator may not dispose of the assets of the inherit-

Sections 892 and 893 of the Civil Code [Bürgerli-

ance if the disposal would be ineffective with re-

ches Gesetzbuch], sections 16 and 17 of the Act

spect to the subsequent heir pursuant to section

Governing Rights in Registered Ships and Ships

2115 of the Civil Code [Bürgerliches Gesetzbuch] in

under Construction [Gesetz über Rechte an

the event of subsequent succession occurring.

eingetragenen Schiffen und Schiffsbauwerken]

3. liabilities arising out of a contract for continu-

off are still subject to a condition precedent or

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ing obligations insofar as the administrator

are not due, or if the claims are not yet based on

claims counter-performance on behalf of the

performance of an equivalent nature, set-off can

insolvency estate.

only occur once the prerequisites for set-off are

met. Sections 41 and 45 shall not apply. Set-off is

Section 91 – Exclusion of Other Acquisition of Rights

excluded if the claim against which set-off is to

(1)

After commencement of insolvency proceedings,

be exercised becomes unconditional and due be-

rights in the assets of the insolvency estate can-

fore set-off can occur.

not be validly acquired even if such acquisition is

(2)

Set-off shall not be excluded by reason of the fact

not based on a disposal by the debtor or compul-

that the claims are expressed in different curren-

sory enforcement on behalf of an insolvency

cies or units of account if these currencies or

creditor.

units of account are freely exchangeable at the

(2)

Sections 878, 892 and 893 of the Civil Code

place of payment of the claim against which set-

[Bürgerliches Gesetzbuch], section 3 (3) and sec-

off is to be exercised. The conversion shall be

tions 16 and 17 of the Act Governing Rights in

made on the basis of the exchange rate effective

Registered Ships and Ships under Construction

for this place at the time of receipt of the set-off

[Gesetz über Rechte an eingetragenen Schiffen

declaration.

und Schiffsbauwerken], section 5 (3) and sections

Section 96 – Inadmissibility of Set-off

16 and 17 of the Act Governing Rights in Aircraft

[Gesetz über Rechte an Luftfahrzeugen] and sec-

(1)

Set-off is inadmissible if

tion 20 (3) of the Maritime Distribution Regula-

1. an insolvency creditor has become indebted to

tions [Schiffahrtsrechtliche Verteilungsordnung]

the insolvency estate only after commencement

remain unaffected.

of insolvency proceedings;

2. an insolvency creditor has acquired its claim

Section 92 – Collective Loss

from another creditor only after commencement

Claims of the insolvency creditors for compensa-

of insolvency proceedings;

tion for loss suffered collectively by these insol-

3. an insolvency creditor has acquired the oppor-

vency creditors as a result of a reduction in the

tunity to set off a claim through an avoidable

value of the assets of the insolvency estate

legal act;

before or after commencement of insolvency

4. a creditor whose claim is to be satisfied from

proceedings (collective loss) may be asserted

the debtor’s free assets is indebted to the insol-

during the insolvency proceedings only by the

vency estate.

insolvency administrator. If such claims are

(2)

Subsection (1) and also section 95 (1) sentence 3

directed against the administrator, they may be

shall not prevent the disposal of financial collat-

asserted only by a newly appointed insolvency

eral within the meaning of section 1 (17) of the

administrator.

Banking Act [Kreditwesengesetz] or the settle-

ment of claims and performance under payment

Section 93 – Personal Liability of Partners

orders, orders between payment service provid-

If insolvency proceedings are commenced in

ers or intermediaries or orders for the transfer of

respect of the assets of a company without legal

securities brought into systems pursuant to sec-

personality or a partnership limited by shares,

tion 1 (16) of the Banking Act [Kreditwesengesetz]

the personal liability of a partner for the liabili-

which serves to implement such contracts, pro-

ties of the company or partnership may be

vided settlement occurs at the latest on the day

claimed during insolvency proceedings only by

of commencement of insolvency proceedings; if

the insolvency administrator.

the other party is a system operator or a partici-

pant in the system the day of commencement of

Section 94 – Maintenance of a Set-off Position

insolvency proceedings shall be determined in

If, at the time when insolvency proceedings are

accordance with the meaning of business day in

commenced, an insolvency creditor has a right of

section 1 (16b) of the Banking Act [Kreditwesen-

set-off by operation of law or on the basis of an

gesetz].

agreement, this right is unaffected by the

Section 97 – Debtor’s Obligation to Disclose Informa-

proceedings.

tion and to Co-operate

Section 95 – Acquisition of a Set-off Position during

(1)

The debtor must disclose information regarding

the Proceedings

all circumstances relevant to the insolvency pro-

(1)

If, at the time when insolvency proceedings are

ceedings to the insolvency court, the insolvency

commenced, one or more of the claims to be set

administrator, the creditors’ committee and, if

necessary modifications to persons who resigned

a claim for non-performance can be asserted.

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from a position specified in sentence 1 not more

This shall also apply to transactions for financial

than two years prior to the application for com-

services with a market or exchange price for

mencement of insolvency proceedings; if the

which a specific date or a specific period was

debtor does not have any representatives, this

agreed if such date occurs or such period expires

shall also apply to the parties holding a participat-

after the commencement of insolvency proceed-

ing interest in the debtor. Section 100 applies with

ings. Financial services include, in particular, the

the necessary modifications to the debtor’s gen-

following

eral partners with the power of representation.

1. the delivery of precious metals;

(2)

Section 97(1) sentence 1 applies with the neces-

2. the delivery of financial instruments or similar

sary modifications to employees and former em-

rights, provided the acquisition of a participating

ployees of the debtor insofar as they left the

interest in a company is not intended to create a

debtor’s employment not more than two years

durable link to this company;

prior to the application for commencement of in-

3. cash payments

solvency proceedings.

a) to be made in foreign currency or in a unit of

(3)

If the persons specified in subsections (1) and (2)

account or

do not comply with their obligations of disclo-

b) the amount of which is determined directly or

sure and co-operation, they may be ordered to

indirectly by means of the exchange rate of a for-

bear the costs of the proceedings if the applica-

eign currency or unit of account, the interest rate

tion for commencement of insolvency proceed-

on claims or the price of other goods or services;

ings is rejected.

4. deliveries and cash payments from derivative

financial instruments that are not excluded by

Section 102 – Restriction of a Basic Right

number 2;

The basic right to the privacy of correspondence,

5. options and other rights to deliveries in accord-

posts and telecommunications (Article 10 of the

ance with sentence 1 or to deliveries, cash pay-

Basic Law [Grundgesetz]) is restricted by section

ments, options and rights within the meaning of

21 (2) No. 4 and sections 99 and 101 (1) sentence 1.

numbers 1 to 5;

Chapter Two – Performance of Transactions.

6. financial collateral arrangements within the

meaning of section 1 (17) of the Banking Act

Co-operation of the Works Council

(Kreditwesengesetz, KWG).

Financial instruments within the meaning of

Section 103 – Insolvency Administrator’s Right of

sentence 3 numbers 2 and 4 mean the instru-

Choice

ments specified in Section C of Annex I to Direc-

(1)

If a reciprocal contract has not been performed or

tive 2014/65/EU of the European Parliament and

has not been fully performed by the debtor and

of the Council of 15 May 2014 on markets in finan-

the other party at the time when insolvency pro-

cial instruments and amending Directive

ceedings are commenced, the insolvency admin-

2002/92/EC and Directive 2011/61/EU (OJ 2014 L

istrator may perform the contract in place of the

173, p. 349; OJ 2015 L 74, p. 38; OJ 2016 L 188, p. 28;

debtor and demand performance from the other

OJ 2016 L 273, p. 35), most recently amended by

party.

Directive (EU) 2016/1034 (OJ 2016 L 175, p. 8).

(2)

If the administrator refuses to perform the con-

(2) The claim for non-performance is determined by

tract, the other party may assert a claim for non-

the market or exchange value of the transaction.

performance only as an insolvency creditor. If the

The market or exchange value shall be

other party requests that the insolvency adminis-

1. the market or exchange price for a substitute

trator exercise his/her right of choice, the admin-

transaction that is concluded immediately fol-

istrator must declare without delay whether or

lowing the commencement of insolvency pro-

not he/she wishes to demand performance of

ceedings, but not later than on the fifth business

the contract. If he/she fails to do so, he/she can-

day following commencement or

not insist on performance.

2. if a substitute transaction in accordance with

number 1 is not concluded, the market or

Section 104 Fixed Term Transactions, Financial

exchange price for a substitute transaction that

Services, Contractual Netting

could have been concluded on the second busi-

(1)

If a precise delivery date or period was agreed for

ness day following the commencement of insol-

goods with a market or exchange price and the

vency proceedings.

date or expiry of the period occurs only after the

If market activity does not allow a substitute

commencement of insolvency proceedings, per-

transaction to be concluded in accordance with

formance of the contract cannot be claimed; only

sentence 2, numbers 1 or 2, the market or

the item from the seller prior to commencement

the insolvency administrator and the other party

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of insolvency proceedings, the insolvency admin-

may withdraw from the contract. If the insol-

istrator who has been requested by the seller to

vency administrator withdraws from the con-

exercise his/her right of choice does not have to

tract, the other party may claim damages as an

make his/her declaration pursuant to section 103

insolvency creditor in respect of the premature

(2) sentence 2 until immediately after the report

termination of the contractual relationship. Each

meeting. This shall not apply if a significant re-

party must notify the other party on request

duction in the value of the item can be expected

within two weeks as to whether it wishes to

during the period up to the report meeting and if

withdraw from the contract; if the party in ques-

the creditor has informed the insolvency admin-

tion fails to do so, such party loses the right to

istrator of this circumstance.

withdraw from the contract.

Section 108 – Continuation of Particular Contractual

Section 110 – Debtor as Landlord or Lessor

Obligations

(1)

If the debtor, as landlord or lessor of immovable

(1)

Tenancies and leases entered into by the debtor

property or premises, disposed of future claims

in relation to immovable property or premises

for rent prior to commencement of insolvency

and also service contracts entered into by the

proceedings, this disposal shall be effective only

debtor shall continue to exist with effect for the

insofar as it relates to the rent for the calendar

insolvency estate. This shall also apply to tenan-

month during which insolvency proceedings are

cies and leases which the debtor entered into as

commenced. If insolvency proceedings are com-

landlord or lessor relating to other assets which

menced after the fifteenth day of a month, the

have been assigned by way of security to a third

disposal shall be effective also in respect of the

party who financed their acquisition or

following calendar month.

production.

(2)

A disposal within the meaning of subsection (1)

(2)

A loan agreement entered into by the debtor as

includes, in particular, the collection of rent. A

lender shall continue to exist with effect for the

disposal effected by means of compulsory en-

insolvency estate insofar as the object owed has

forcement shall be equivalent to an act disposing

been made available to the borrower.

of a right.

(3)

Claims for the period prior to commencement of

(3)

The tenant or lessee may set off a claim held

insolvency proceedings may be asserted by the

against the debtor against the claim for rent for

other party only as an insolvency creditor.

the period specified in subsection (1). Sections 95

Section 109 – Debtor as Tenant or Lessee

and 96 Nos 2 to 4 remain unaffected.

Section 111 – Sale of Let or Leased Property

(1)

A tenancy or lease entered into by the debtor in

relation to immovable property or premises as

If the insolvency administrator sells immovable

tenant or lessee may be terminated by the insol-

property or premises let or leased by the debtor

vency administrator irrespective of the agreed

and the acquirer takes over the tenancy or lease

contractual term or an agreed exclusion of the

agreement in place of the debtor, the acquirer

ordinary right of termination; the notice period

may terminate the tenancy or lease agreement

shall amount to three months to the end of a

subject to the statutory notice period. Termina-

month unless a shorter notice period is applica-

tion can be effected only as of the earliest per-

ble. If the subject matter of the tenancy is the

mitted date.

debtor’s dwelling house, termination shall be re-

Section 112 – Prohibition of Termination

placed by the right of the insolvency administra-

tor to declare that claims which become due af-

After the application for commencement of

ter the expiry of the period specified in sentence

insolvency proceedings has been lodged, a ten-

1 cannot be asserted in the insolvency proceed-

ancy or lease agreement which the debtor

ings. If the administrator effects termination

entered into as tenant or lessee cannot be termi-

pursuant to sentence 1 or if he/she makes a dec-

nated by the other party on the grounds of:

laration pursuant to sentence 2, the other party

1. default in the payment of rent ­arising prior to

may claim damages as an insolvency creditor in

the application for commencement­ of insolvency

respect of the premature termination of the con-

proceedings;

tractual relationship or in respect of the conse-

2. deterioration in the debtor’s financial

quences of the declaration.

circumstances.

the Works Constitution Act [Betriebsverfas-

would be available for distribution to the insol-

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sungsgesetz] within three weeks from the date of

vency creditors in the absence of a social com-

commencement of negotiations or of a written

pensation plan may be used for the settlement of

request to commence negotiations, despite the

social compensation plan claims. If the total

administrator having provided comprehensive in-

amount of all social compensation plan claims

formation to the works council in good time, the

exceeds this limit, the individual claims shall be

insolvency administrator may apply for the ap-

reduced proportionately.

proval of the Labour Court to the implementation

(3)

Whenever sufficient liquid funds are available in

of the operational alteration without this being

the insolvency estate, with the approval of the

preceded by proceedings pursuant to section 112 (2)

insolvency court the insolvency administrator

of the Works Constitution Act [Betriebsverfas-

shall make payments on account towards the so-

sungsgesetz]. To this extent section 113 (3) of the

cial compensation plan claims. Compulsory en-

Works Constitution Act [Betriebsverfassungsgesetz]

forcement against the insolvency estate is not

shall not be applicable. The right of the insolvency

permitted in respect of a social compensation

administrator to bring about a re-conciliation of

plan claim.

interests pursuant to section 125 or to lodge an

Section 124 – Social Compensation Plan Prior to

application for declaratory judgment pursuant to

section 126 remains unaffected.

Commencement of Insolvency Proceedings

(2)

The court shall grant its approval if the financial

(1)

A social compensation plan drawn up prior to the

position of the enterprise, taking into considera-

commencement of insolvency proceedings but

tion the social interests of the employees as well,

no earlier than three months prior to the applica-

requires the operational alteration to be imple-

tion for commencement of insolvency proceed-

mented without prior proceedings pursuant to

ings may be revoked by the insolvency adminis-

section 112 (2) of the Works Constitution Act [Be-

trator or by the works council.

triebsverfassungsgesetz]. The provisions of the

(2)

If the social compensation plan is revoked, the

Labour Court Act [Arbeitsgerichtsgesetz] concern-

employees entitled to claims under the social

ing court order proceedings apply with the nec-

compensation plan may be taken into account if

essary modifications; the parties to the proceed-

a social compensation plan is drawn up within

ings are the insolvency administrator and the

the insolvency proceedings.

works council. The application shall be dealt with

(3)

Benefits received by employees towards their

as a matter of priority in accordance with section

claims from the revoked social compensation

61a (3) to (6) of the Labour Court Act [Arbeits-

plan prior to commencement of insolvency pro-

gerichtsgesetz].

ceedings cannot be reclaimed on the grounds of

(3)

There is no right of appeal against the decision of

the revocation. When a new social compensation

the court to the Higher Labour Court. An appeal

plan is drawn up, in calculating the total amount

may be brought before the Federal Labour Court

of the social compensation plan claims pursuant

if this is allowed in the decision of the Labour

to section 123 (1), such benefits to dismissed em-

Court; section 72 (2) and (3) of the Labour Court Act

ployees shall be deducted to the extent of up to

shall apply with the necessary modifications. The

two and a half months’ salary.

substantiated appeal must be lodged with the

Section 125 – Reconciliation of Interests and Protec-

Federal Labour Court within one month of service

of the Labour Court’s full written decision.

tion against Dismissal

(1)

If an operational alteration (section 111 of the

Section 123 – Scope of the Social Compensation Plan

Works Constitution Act [Betriebsverfassungsge-

(1)

In order to compensate for or mitigate the finan-

setz]) is planned and the employees who are to

cial prejudice sustained by employees as a result

be dismissed are designated by name in a recon-

of the planned operational alteration, a social

ciliation of interests between the insolvency ad-

compensation plan drawn up subsequent to

ministrator and the works council, section 1 of

commencement of insolvency proceedings may

the Protection Against Unfair Dismissal Act [Kün-

provide for a total of up to two and a half months’

digungsschutzgesetz] shall apply subject to the

salary (section 10 (3) of the Protection Against

provisos that:

Unfair Dismissal Act [Kündigungsschutzgesetz])

1. it shall be presumed that termination of the

for the employees affected by dismissal.

employment contracts of the designated

(2)

The liabilities under such a social compensation

employees is due to compelling operational

plan are preferential liabilities. However, if an in-

requirements which preclude the continued

solvency plan does not materialise, not more

employment of the employees in the company or

than one third of the insolvency estate which