Recent Publications by Ludger Westrick
- Reorganisation during insolvency
- Experience with successful reorganisations and insolvency plans
- Chances and risks of personal management pursuant to the Insolvenzordnung (German Insolvency Code)
- Copyrights during insolvency
- The annexes to the insolvency plan
Westrick: Reorganisation during insolvency. Lecture given before the German Bundesfinanzakademie, Berlin, 4 December 2009
The lecture examines the reasons why companies are so rarely reorganised during insolvency. This is not only caused by the debtor who misses the chance of restructuring the company in the heat of his battle for survival, but also by the administrator, who too often breaks the company up because he lacks understanding for the chance of reorganisation as well as the tools for its application. The typical mistakes by banks and consultants during the crisis are explained. The debtor in possession (Schuldner in Eigenverwaltung) becomes the primary engineer of his own crisis instead of being the victim in the normal insolvency proceedings. He continues to be able to operate his business, and in addition can use the instruments provided by the Insolvenzordnung (German Insolvency Act) in order to eliminate the weaknesses of his company. The Eigenverwalter too must serve the optimum satisfaction of the creditors. Debtors submitting insolvency applications in good time, presenting substantiating figures and not only trying to blame others for the crisis, have earned the privilege of Eigenverwaltung. With an Insolvency Plan (Insolvenzplan), companies can be reorganised and the creditors' distribution quota can be improved.
PDF of the manuscript (in German)
Westrick: Experience with successful reorganisations and insolvency plans, in Wirtschaftsprüfung (Wpg) special edition 2003, 172 et seq.
The article is the published version of a lecture given during the Wirtschaftsprüfertag (auditors’ congress) 2003 in Hamburg.
The presentation relates to the restructuring of the medium-sized group of companies ZERA - a high tech company with 100 employees based in Königswinter - from the point of view of operations, finances and company law. The holding company and the operating company, both of them established in the legal form of a GmbH & Co KG, were insolvent and over-indebted in 1999. During the insolvency, the old-established company successively renewed its marketing, its sales, its products, its production and also its relationships to employees, customers and banks, on the basis of a business plan. ZERA incorporated the business plan into an insolvency plan which offered the creditors without collateral a quota of 55%, and the bank annuities on its credits which were converted into long-term loans. After the insolvency plan came into effect, the operating company was converted into the holding company. After pay-out of the last instalment to the creditors without collateral, the supervision through the insolvency administrator was terminated in 2004.
Westrick: Chances and risks of personal management pursuant to the Insolvenzordnung (German Insolvency Code), Neue Zeitschrift für das Recht der Insolvenz und Sanierung (NZI) 2003, 65 et seq.
Provided the debtor submits an application in good time, with up-to-date and substantiating documents, in particular in cases where an elaborate insolvency plan for the reorganisation and continuation of the company is submitted with the application for personal management (Eigenverwaltung), the courts should refrain from the usual appointment of a preliminary insolvency administrator during the preliminary proceedings, in order to not prejudice the personal management. The expert appointed by the court can be questioned about the reasons for the insolvency and the coverage of the costs for the proceedings, but also about whether the creditors may face delays or other disadvantages due to the personal management. Personal management cannot be refused with reference to the fact that the debtor is the person responsible for the economic collapse. The possibilities of structuring the insolvency often only enable the debtor to reorganise his company. If the courts honoured the timely issue of applications for personal management supported by substantiating documents which, if necessary, can be supplied subsequently, and refrained from appointing experts who, in particular in larger-scale proceedings, seize the lucrative management for themselves, the objective of the Insolvenzordnung could be reached, which is to increase the estate and to improve the distribution quota by submitting insolvency applications at an earlier stage. This opinion is harshly criticised by Förster in the magazine Zeitschrift für das gesamte Insolvenzrecht (ZInsO) 2003, 402 et seq.
Westrick/Bubenzer: Das Copyrights during insolvency, Festschrift für Hertin, Munich, 2000, S. 287 et seq.
This article first deals with the copyright author’s insolvency. It shows that copyrights do not form a part of the exploitable insolvency estate, and that the exploitation of the utilisation rights requires approval by the holder of the rights. However, if the holder of the utilisation rights is insolvent, the utilisation rights are a part of the insolvency estate. The insolvency administrator can choose to fulfil the utilisation contract, is, however, obligated to comply with the restrictions resulting from the author’s rights.
Westrick: The annexes to the insolvency plan, Deutsches Steuerrecht (DStR) 1998, 1879 et seq.
This article, published prior to the Insolvenzordnung (InsO - German Insolvency Code) taking effect, deals with the declarations of intent issued by creditors, debtor, shareholders and third parties with regard to the insolvency plan, mainly, however, with the conceptional calculations which become necessary if the intention is to satisfy the creditors’ claims from the company’s future proceeds. This includes the conceptional overview of assets, the conceptional income statement and the liquidity plan. The conceptional overview of assets is compiled in accordance with the regulations regarding the calculation of over-indebtedness for the inclusion and evaluation of assets. This overview shows whether the insolvency reason “over-indebtedness” can be eliminated when taking the intended legal modifications into account. The conceptional income statement is compiled on the basis of accounting principles. The special influences on cash flow caused by the insolvency are described in the liquidity plan.