Hengeler Mueller leads insolvency administrator Frank Kebekus to a successful outcome before the German Federal Court of Justice - landmark decision in international insolvency law

With a landmark decision taken on 8 December 2022 (IX ZB 72/19), the German Federal Court of Justice (BGH) has significantly refined international insolvency law as it applies in Germany, clarifying that insolvency petitions filed in third countries cannot block the protection of debtor assets through insolvency proceedings conducted in Germany.

This decision also brings to an end a legal dispute regarding international jurisdiction for insolvency proceedings that had lasted for several years. The dispute arose following the October 2019 restructuring of the Galapagos Group, which has locations in North Rhine-Westphalia (Bochum and Herne). The owner of the Galapagos Group had intended to implement the restructuring through a scheme of arrangement in combination with administration proceedings under English law in order to truncate claims of certain creditors. Together with a number of other creditors, the owner began by taking steps to relocate the Galapagos Group's head office to England. Then an insolvency petition was filed with the High Court of Justice. However, before the High Court decided on the petition, the head office was moved to Düsseldorf. The Local Court (Amtsgericht) of Düsseldorf instituted insolvency proceedings and appointed Frank Kebekus as the insolvency administrator.

The BGH's Ninth Civil Panel, responsible for insolvency law matters, has confirmed that the Local Court of Düsseldorf has jurisdiction. The Panel ruled that a petition to open insolvency proceedings in a third country has no preclusive effect in Germany under German international insolvency law. Previously, on a reference from the BGH, the Court of Justice of the European Union decided (C-723/20) that an insolvency petition that was filed in England, but not decided on lost its preclusive effect – which insolvency petitions have in principle under European insolvency law – once the Brexit transition period ended on 31 December 2020.

Hengeler Mueller advised Frank Kebekus in the proceedings before the BGH and during the preliminary ruling proceedings before the Court of Justice of the European Union. The team is led by partners Carsten van de Sande (Dispute Resolution, Frankfurt) and Martin Tasma (Restructuring, Berlin) and includes partners Mathäus Mogendorf (Dispute Resolution, Berlin), Matthias Hentzen (Corporate/M&A, Düsseldorf) and Johannes Tieves (Restructuring, Frankfurt) as well as associates Anabel Harting, Alexander Ruckteschler, Robert Schimmelpfennig (all Dispute Resolution, all Frankfurt), Fabian Berdin, Moritz Müller-Leibenger, Nicolas Kutscher and Jasper Bothe (all Restructuring, all Berlin).

Before the BGH, Kebekus was represented by Christian Rohnke (Rohnke Winter, based in Karlsruhe, Germany), an attorney-at-law licenced to practice before the BGH.