Restructuring in Germany and the Role of the UK with Luther Lawfirm Partners

And I'd, I'd like to talk about something, Oliver-

Can I jump in here?

... uh, that, uh, i- is a bit sensitive in a way because I, I, I think sometimes I get into, I feel like it's a bit stereotyped because as an English lawyer, I, I do a lot of advising of directors on their duties, and I, I often say to them that we are not one of the more, um, ferocious jurisdictions, um, uh, you know, in terms of sort of, uh, uh, after the event going after directors and litigation.

And I often point the finger at, at, at Germany and say, "Actually, it's, it, you know, it's a pretty tough jurisdiction sometimes on, on, on directors." Uh, um-

Yes

... is that, is that just an incorrect outsider's perspective? Or, uh, do you think I'm right in saying that actually that, that there is quite a lot of, uh, harshness in the German system related to directors post-insolvency?

post-insolvency?Oh, yes.

Uh, oh, yes, it is.

Well, it is a harsh jurisdiction.

Actually, due to the earliness of the, uh, grounds for insolvency as they occur in Germany.

So, uh, not only liquidity is a binding reason for the management to file for insolvency, but also indebtedness and over-indebtedness.

And over-indebtedness basically means if to break up values, you cannot cover all your liabilities-

Mm-hmm

... then you need a positive going concern forecast, meaning you need to stay in the status of liquidity for the next 12 months with m- major probability.

Yeah.

And that debt is actually, it's very early s- and it's not that easily detected because-

Yes

... you don't, you don't have the data automatically.

In, in very few business models you automatically have the data, how your liquidity will, uh, uh, will turn out in nine, 10, 11, 12 months, and you don't really have the breakup values of what, what your assets are actually worth.

So to detect this moment is very early.

You have to detect it very early, and if you don't, you are already in breach of some management obligations.

And that is, that is where the severe, the harshness of the German jurisdiction and the German rules about manager's liability come from.

Yeah.

And, and am I right in saying that once you've hit illiquidity, um, you're supposed to file within 21 days? Is, is that still the case?

That's still the case, yes.