A Global Guide
Chapter 13: NATIONAL REPORT FOR GERMANY
This chapter investigates the treatment of executory contracts under German corporate insolvency law. The InsO also regulates the impact on the private rights of the parties concerned. This applies in particular to the handling of contractual relationships and to the contestation of legal transactions, which have been carried out before the opening of the insolvency proceedings. Under the existing law, the processing of open legal relationships is a core problem in insolvency proceedings. According to the InsO, the legal situation of the debtor is treated differently, depending on the kind of legal relationship. A general rule for the execution of mutual contracts, which is quite relevant in practice, is Section 103, which grants the insolvency administrator a right of choice with regard to the fulfilment of certain contracts. Exceptions apply and are investigated throughout the report, alongside with the effect of remedies agreed by the parties in solvent times (such as ipso facto clauses). This chapter observes that insolvency related dissolution clauses are fundamentally anticompetitive. As a rule, the job of insolvency administrators is made more difficult if they cannot insist on the fulfilment of pre-existing contracts concluded by the debtor. Inversely, the ineffectiveness of the dissolution clauses regularly prevents creditors from walking away from contracts that are favourable to the debtor and which could be vital for the continuation of the business in the short term.
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