As part of my advisory practice, investors (bond creditors), courts, lawyers and insolvency administrators increasingly ask me by whom and how the joint representative appointed in the insolvency proceedings is to be remunerated.
I. Practice until the decision of the Federal Court of Justice
The practice was as follows until the decision of the Federal Court of Justice (BGH): After the opening of the insolvency proceedings, the respective insolvency court convened a so-called bondholders’ meeting according to the Debt Securities Act in conjunction with the insolvency regulations. During the bondholders’ meeting that then took place, the bondholders voted on the person of the joint representative. They also regularly decided that the joint representative should be appropriately remunerated. As a rule, it was not determined who should pay the remuneration.
For the joint representative appointed outside of the insolvency proceedings, the Debt Securities Act provides that the issuer is obliged to bear the costs accordingly. In practice it was predominantly assumed that in insolvency proceedings the costs of joint representation would have to be paid from the bankruptcy estate.
In its decision of January 12, 2017, Az. IX ZR 87/16, the Federal Court of Justice denied the insolvency estate’s obligation to bear the costs.
II. Consequences for practice:
Many joint representatives have been trying to impose the costs on the bondholders since the BGH decision. In its most recent decision, the Nuremberg Higher Regional Court expressly stated that the joint representative cannot, in principle, demand any payment from the bondholders, unless the joint representative and the respective bondholder so agree.
III. What does this mean for the bondholders?
Bondholders who are asked to pay fees (mostly by lawyers) should seek advice from a lawyer who is well versed in this area. As a rule, the bondholder does not have a direct payment obligation to a joint representative.
It is permissible – as also the Federal Court of Justice in its decision of January 12, 2017 – for the joint representative to deduct his remuneration from the rate of bondholders; however, this also requires a resolution by the bondholders.
For all bondholders who have not concluded an individual agreement with the joint representative, the rule is that a payment claim is more than doubtful. However, such requests for payment should not be ignored. The past shows that many joint representatives took legal action. This can be avoided through a legally justified rejection of the claims.
Who are we?
Sascha Borowski (specialist lawyer for banking and capital markets law) from the Buchalik Brömmekamp law firm has been successfully representing investors for over twelve years. He advises bondholders in numerous proceedings, including as joint representative, and has published several specialist articles on the German Debt Securities Act.
The Buchalik Brömmekamp law firm is one of the market-leading insolvency and restructuring consultants and has received numerous awards, including from FOCUS as the TOP commercial law firm in the field of insolvency and restructuring.
Please do not hesitate to contact us:
by E-Mail: [email protected]
per Telephone: +49 (0) 211- 828977 200
or by post: Buchalik Brömmekamp Rechtsanwaltsgesellschaft mbH, Prinzenallee 15, 40549 Düsseldorf,
Visit us at: https://www.kapitalanlagen-krise.de/
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