Decision of German Federal Supreme Court regarding illiquidity and imminent illiquidity

This briefing from Taylor Wessing concerns the decision of the German Federal Supreme Court regarding illiquidity and imminent illiquidity.

If a fixed-term loan becomes due, the debtor’s payment obligation has to be taken into account when assessing the debtor’s illiquidity according to sec. 17 of the German Insolvency Act (Insolvenzordnung), even if the lender has not demanded the debtor to pay back the loan.

The debtor might be facing imminent illiquidity (drohende Zahlungsunfähigkeit) according to sec. 18 of the German Insolvency Act notwithstanding an extension granted by the lender if negotiations about debt restructuring conducted during this time do not offer secure prospects of success…

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