TY - JOUR

T1 - Economie considerations regarding the mandatory insolvency petition under german law

AU - Hirte, Heribert

AU - Schall, Alexander

PY - 2010

Y1 - 2010

N2 - The mandatory insolvency petition in German law represents an element of 'exit' liability in the law of stock corporations; it is a complement to the prohibition of payments, as regulated in § 64 (formerly Subsec. 2) GmbHG, §§ 92 Subsec. 2 (formerly Subsec. 3), 93 Subsec. 3 Nr. 6 AktG. The goal of pulling 'sick' companies from the market at the right time is economically appropriate; however, due to the inflexibility of the regulation in question, this goal is only partially realized. Of particular concern is the requirement of a mandatory insolvency petition even when there is a positive survival prognosis for the company; this prevents a successful restructuring while simultaneously triggering liquidation mechanisms. Furthermore, implementing the mandatory insolvency petition leads to high costs on the part of the operators of the debtor company. Therefore, it is preferable to withdraw the strict mandatory insolvency petition while simultaneously expanding prohibitions of payment (as already foreseen by the MoMiG) and also simplifying creditors' petition rights. A first, though only transitional step in this right direction was just recently taken in the FMStG. If, in the event of a positive survival prognosis for the company, one equips the stringent mandatory insolvency petition in accordance with the suggestions given here, not only will economic considerations be satisfied; moreover, convergence will be (re-)established with respect to European 'exit' liabilities in an important field. This would defuse problems arising in both European law and international private law vis-a-vis the applicability of German ,exit' liability to foreign companies; also, it would set a course for a Europe-wide harmonization of ,exit' liability. This shows that the development and petition of economic principles can make an important contribution toward solving problems of international law.

AB - The mandatory insolvency petition in German law represents an element of 'exit' liability in the law of stock corporations; it is a complement to the prohibition of payments, as regulated in § 64 (formerly Subsec. 2) GmbHG, §§ 92 Subsec. 2 (formerly Subsec. 3), 93 Subsec. 3 Nr. 6 AktG. The goal of pulling 'sick' companies from the market at the right time is economically appropriate; however, due to the inflexibility of the regulation in question, this goal is only partially realized. Of particular concern is the requirement of a mandatory insolvency petition even when there is a positive survival prognosis for the company; this prevents a successful restructuring while simultaneously triggering liquidation mechanisms. Furthermore, implementing the mandatory insolvency petition leads to high costs on the part of the operators of the debtor company. Therefore, it is preferable to withdraw the strict mandatory insolvency petition while simultaneously expanding prohibitions of payment (as already foreseen by the MoMiG) and also simplifying creditors' petition rights. A first, though only transitional step in this right direction was just recently taken in the FMStG. If, in the event of a positive survival prognosis for the company, one equips the stringent mandatory insolvency petition in accordance with the suggestions given here, not only will economic considerations be satisfied; moreover, convergence will be (re-)established with respect to European 'exit' liabilities in an important field. This would defuse problems arising in both European law and international private law vis-a-vis the applicability of German ,exit' liability to foreign companies; also, it would set a course for a Europe-wide harmonization of ,exit' liability. This shows that the development and petition of economic principles can make an important contribution toward solving problems of international law.

KW - Law

UR - http://www.scopus.com/inward/record.url?scp=77954321327&partnerID=8YFLogxK

U2 - 10.1177/02601079X10002200106

DO - 10.1177/02601079X10002200106

M3 - Scientific review articles

VL - 22

SP - 73

EP - 88

JO - Journal of Interdisciplinary Economics

JF - Journal of Interdisciplinary Economics

SN - 0260-1079

IS - 1-2

ER -