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The links to the left will take you to pages with information which will allow you to get a general idea of German insolvency law. The effectiveness of insolvency proceedings in Germany has been ranked 2nd within the EU in the country sheet published by the European Commission as part of its initiative to enhance the rescue culture in Europe. Please be aware that the German Insolvency Code has been reformed in several stages since 2011. For an overview of the changes in the law through these reforms, please use the link "Current Developments" in the navigation bar above.
There are two peculiarities in German insolvency law most foreign judges and attorneys are unfamiliar with. They are worth being mentioned here:
- No Automatic Stay
Filing a voluntary or involuntary petition does not result in an automatic stay. Theoretically, the creditors can continue enforcing their claims until the proceedings are formally opened by a court judgment. In business insolvencies, the period between the filing of the petition and the opening of the proceedings may extend up to three months. The court may, however, restrain or stay individual enforcement measures against the debtor after having satisfied itself that the petition is admissible. When an involuntary petition is filed by a creditor, the court will generally hear the debtor before taking any measures to preserve the assets which will become the insolvency estate after the proceedings have been opened. Until the deadline for the debtor's answer expires, the court will generally remain inactive. When a debtor files a voluntary petition, there is no need to hear the debtor so action by the court is mostly immediate. If the debtor's business has alreday been discontinued, the court will generally appoint an examiner to find out if the requirements for opening the proceedings are met. The appointment of an examiner does not effect a stay, however. If the debtor's business is still active when the voluntary petition is filed, the court will have to decide whether appointing an examiner is sufficient. If preservation measures are required, most courts tend to appoint an interim insolvency administrator (vorläufiger Insolvenzverwalter) and to order a stay. It is important for foreign judges or attorneys to understand that German insolvency proceedings have two stages: The pre-opening stage and the post-opening stage.
The Rechtspfleger is a specialized court officer who replaces the judge in a limited area of legal activity. The German term is not translated here because, as far as I know, equivalent or comparable court officers do not exist in in comman law jurisdictions. When I described the functions of a Rechtspfleger to English speaking judges during a discussion between German judges and judges from other countries in Berlin in 2008, an American judge referred to them as "mini judges". They handle matters which are often handled by court commissioners in US courts such as a variety of uncontested matters.
The Rechtspfleger is a very important officer in insolvency proceedings. After the proceedings have been opened by the judge, they are from then on presided by the Rechtspfleger. This means that the Rechtspfleger represents the court in the post-opening stage. The judge is no longer involved unless the debtor or the insolvency administrator submit an insolvency plan. Theoretically, the judge may decide to retain control of the proceedings. But the judges very rarely do that because they have little or no experience with the post-opening stage.
Unlike a judge, a Rechtspfleger does not have to attend law school and obtain a J.D. degree. But he has to go through a legal education program especially designed for the Rechtspfleger profession. The German states run internal colleges for that program. Generally, the colleges will only admit students who have the revocable status of a civil servant of the state running the college. The program takes three years to complete. It is made up of both on and off the job training. In Baden-Württemberg (the German state the editor of this website lives in), it includes 12 months of studies at the college, followed by 13 months practical training at an Amtsgericht (County Court) and in the office of a civil law notary, followed by 9 months of studies at the college and concluded by two months of practical training with the office of the public prosecutor. At the end of the program, the students have to take the Rechtspfleger exam. Each student who passes the exam is awarded the degree of “Diplomrechtspfleger”. The Rechtspfleger is independent like a judge in his decisions. The Rechtspfleger’s responsibilities include, inter alia, the following matters: - supervision of legal guardians - rulings on applications for entry in the commercial register - registration of mortgages and similar rights in the registry of deeds - judicial sales of realty - execution of civil and criminal judgments (e.g., garnishment orders, orders that prison sentences or fines imposed by a court be executed) - probating of wills (not in all states) - conduct of insolvency proceedings