In a judgement of April 2010, the Federal Court of Justice (BGH, 22 April 2010, IX ZR 8/07) confirmed its established case law that an assignment of future receivables does not cover claims arising after the opening of insolvency proceedings.
In the case heard by the court, a company had assigned its future trade receivables as security to a bank. After insolvency proceedings were opened over that company, it continued trading with a certain debtor. This debtor paid receivables relating to deliveries made after the opening of the proceedings to the bank (as assignee) instead of paying them to the insolvency administrator. The administrator later requested the debtor to pay these receivables to the insolvency estate (even though the debtor had already paid to the bank). The insolvency administrator argued that the relevant receivables arose only after opening of the proceedings so that the old security assignment of future receivables did not cover these claims.
The BGH confirmed the administrator's view and ruled that pursuant to § 91 German Insolvency Code, an assignment of future receivables does not catch receivables which come into existence after opening of insolvency proceedings; such receivables generally become part of the insolvency estate. The court confirmed that – although an assignment of future receivables is legally possible – such assignment would only become effective when the assigned receivable itself comes into existence. Therefore, the prohibition of the acquisition of estate assets without the approval of the administrator in § 91 German Insolvency Code prevented a valid assignment of the post-opening claims to the bank.
Practice guide
- To avoid double payments, scheduled payments to creditors (and other transactions) should be reviewed by debtors as soon as the actual creditor or a predecessor creditor becomes insolvent.
- In respect of assigned receivables which arise during preliminary insolvency proceedings, debtors face similar issues.