Debtor-in-possession financing

Loans are the mass in the insolvency proceedings by the liquidator in " mass creditors " ( banks, government development agencies, suppliers or customers ) loans taken for business continuity by ensuring the ability to pay. It is a special form of mass liabilities.

Legal bases

Already the Bankruptcy Code applicable to 1999 saw the concept of " mass debt " in § 59 of the Bankruptcy Code (KO) before. In the since then applicable bankruptcy law ( Insolvency ) but has refrained from a legal definition of the term " mass liabilities " of the legislature, but sets this in § 61 Insolvency assumed to be known. After all liabilities newly recorded by the liquidator of the insolvent company are to be regarded as a mass liabilities. Similarly, a pending claim in the insolvency table not be mass demand. Mass claims are therefore claims of contractors in particular from the investments made by the liquidator purchases of raw materials / goods for the mass of bills and checks obligations of the Administrator and from recorded of him loans. The mass creditor has to prove in the case of dispute, only that the mass of credit for the purpose mentioned granted with the approval of the administrator, but not that of mass credit was also used for the aforementioned purpose. Adjudication claims over other creditor claims privileged, because the mass creditor does not have to take credit from the bankruptcy rate.

According to § 53 Insolvency Act, the loan repayment has been made (if appropriate insolvency exists) of bulk loans (since they are mass liabilities) in priority to the claims that have been received before opening of insolvency proceedings. In the case of the continuation of the company to mass loan turn to the closure of insolvency proceedings in regular claims against the company.

The liquidator has to satisfy the debts of after in § 209 Insolvency regulated hierarchy.

Enforcement measures with respect to claims arising from mass loans are basically prohibited by § 90 Insolvency in the first half year after the opening of insolvency proceedings.

From the perspective of mass is the mass creditors credit a loan within the meaning of § 488 Section 1 BGB fall in banks lending mass as all loans under the credit term of § 19 Section 1 of the German Banking Act and subject to the same prudential reporting requirements.

Liability of the liquidator

Already on the basis of the old bankruptcy law, the Bundesgerichtshof had warned the mass creditors. Thus, the business partner of the bankruptcy trustee were warned by the bankruptcy proceedings as such and would have the risk of mass inadequacy of their claims be aware of. Only if the bankruptcy trustee had recognized or applying the opportunities offered due diligence was able to recognize that the operation does not even erwirtschafte his effort and the existing ground to cover not sufficient, he liable under § 82 KO which nevertheless justified mass debt.

That case-law mass creditors hardly protective of the BGH has therefore been replaced by the new Insolvency Act. Stricter liability of the liquidator for mass liabilities is established in § 61 Insolvency Act that can not be repaid from the assets (so-called mass inadequacy ). Then the manager is committed to the mass creditors for compensation which the mass creditor must prove breach of duty to the administrator.

To aggravate the liability, engages § 61 sentence 2 Insolvency even for fairly technical means the burden of proof, then the personal liability of the liquidator in mass deficiency is the rule. If a mass creditors of their claims, that person will already suspected for the time they are incurred, that this failure was more likely than the opposite. The administrator can dispel this presumption by proving the opposite, or at least relieve the proof that he has not the suspected mass inadequacy can recognize. The administrator shall be liable therefore, if he can not exonerate itself from the accusation that he was able to recognize one Insolvency in justification of mass liabilities by choosing the contract in accordance with § 103 para that the mass would not be expected to be adequate to meet the liabilities. The liability occurs already when the demand of the creditor mass at maturity can not be met.

The liquidator must inform himself of the progress of recovery of the mass liabilities by presenting continuous liquidity planning and status overviews. However, he is not liable if he an the date of acquisition of the mass obliga tions - based on true facts and attachment created carefully considered liquidity plan, which was to be expected fulfillment of mature mass liability - for those days. An unpredictable misjudgment is also not contrary to duty.

To exclude a liability is the liquidator required by the case law, derive basis of a correct accounting statement of proven job, income, or a carefully crafted insolvency plan the safe prediction that captured mass loans can be repaid.

Special risk

Nevertheless, mass creditors are faced with specific repayment risk. You must be able to rely largely on the prognosis of the administrator that their mass loans can be repaid with interest according to the contract and not subject to the risk of mass inadequacy. Because only the trustee has a complete overview of the extent of the mass and the amount of mass liabilities. His liability begins only after the occurrence of the mass deficiency is more likely than the non-occurrence.

The stricter liability of the manager has justified the legislature, the contractor meet with insufficient mass at an increased risk that goes far beyond the general hazards of the contract is concluded with a liquidator. The stricter liability should therefore reduce the risk that a third party would be willing not to take up business relationship with the insolvent company. The going concern would thereby make it difficult.

The Solvency concerns the grant of loans for mass credit institutions - much more difficult - if they remain unsecured. Assuming that a large number of mass corporate loans would be granted with very poor ratings, this mass loans must be backed with 150 % equity. Not even the formal stricter liability of the liquidator does not change.

It is doubtful, however, whether these formal stricter liability on the ground creditors material uses something. As a rule can be assumed that the amount of loans exceeds the mass adhering private assets of the insolvency administrator by far, so the possible damages claims are not likely to be covered by the private assets. This leaves for consideration the mass of creditors, a company located in a critical situation to grant mass Loans subject taking into account any collateral an insolvency law privilege.