Insolvency Statute (Insolvenzordnung, InsO)

Promulgated on 5 October 1994, as last amended on 1 January 2002.

Translation provided by the Federal Ministry of Justice and reproduced with kind permission.

Insolvency Statute - Contents

1. Part One: General Provisions
   1. Section 1: Objectives of the Insolvency Proceedings
   2. Section 2: Jurisdiction of the Local Court as Insolvency Court
   3. Section 3: Local Jurisdiction
   4. Section 4: Applicability of the Code of Civil Procedure (Zivilprozessordnung)
   5. Section 4a: Deferment of the Cost of the Insolvency Proceedings
   6. Section 4b: Repayment and Adjustment of the Deferred Amounts
   7. Section 4c: Rescission of Deferment
   8. Section 4d: Legal recourse
   9. Section 5: Principles of the Insolvency Proceedings
   10. Section 6: Immediate Appeal
   11. Section 7: Appeal on Points of Law
   12. Section 8: Service
   13. Section 9: Publication
   14. Section 10: Hearing of the Debtor
2. Part Two: Opening of Insolvency Proceedings. Involved Assets and Parties
   1. Chapter One: Prerequisites of Opening and Opening Proceedings
      1. Section 11: Admissibility of Insolvency Proceedings
      2. Section 12: Corporations under Public Law
      3. Section 13: Request to Open Insolvency Proceedings
      4. Section 14: Request by the Creditor
      5. Section 15: Entitlement to Request the Opening of Insolvency Proceedings for Assets Owned by Corporations and for the Assets Owned by Companies without Legal Personality
      6. Section 16: Reason to Open Insolvency Proceedings
      7. Section 17: Illiquidity
      8. Section 18: Imminent Illiquidity
      9. Section 19: Overindebtedness
      10. Section 20: Obligation of Disclosure During the Opening Proceeding, Reference to Discharge of Residual Debt
      11. Section 21: Decisions Ordering Arrestment
      12. Section 22: Legal Status of the Temporary Insolvency Administrator
      13. Section 23: Publication of Restriction on Property Transfers
      14. Section 24: Effects of Restrictions on Property Transfers
      15. Section 25: Repeal of Measures of Arrestment
      16. Section 26: Refusal for Lacking Assets
      17. Section 27: Order Opening the Insolvency Proceedings
      18. Section 28: Requirements Incumbent on the Creditors and Debtors
      19. Section 29: Docketing of Meetings
      20. Section 30: Publication of the Order Opening the Insolvency Proceedings.
      21. Section 31: Commercial Register, Register of Cooperatives and Register of Associations
      22. Section 32: Land Register
      23. Section 33: Ship/Aircraft Register
      24. Section 34: Appeal
   2. Chapter Two: Assets Involved in the Insolvency Proceedings. Classification of Creditors
      1. Section 35: Definition of the Assets Involved in the Insolvency Proceedings
      2. Section 36: Objects not Subject to Attachment
      3. Section 37: Joint Marital Property of a Community
      4. Section 38: Definition of the Creditors of the Insolvency Proceedings
      5. Section 39: Lower ranking Creditors of the Insolvency Proceedings
      6. Section 40: Claims to Maintenance
      7. Section 41: Immature Claims
      8. Section 42: Claims Subject to a Resolutory Condition
      9. Section 43: Liability Incumbent on Several Persons
      10. Section 44: Rights of Obligors Liable Jointly and Severally and of Guarantors
      11. Section 45: Conversion of Claims
      12. Section 46: Recurring Payments
      13. Section 47: Right to Separation
      14. Section 48: Right to Separation Extending to the Consideration Received as a Substitute for the Object of Separation
      15. Section 49: Separate Satisfaction from Immovables
      16. Section 50: Separate Satisfaction of Pledgees
      17. Section 51: Other creditors with a Claim to Separate Satisfaction
      18. Section 52: Elimination of Creditors with a Right to Separate Satisfaction
      19. Section 53: Creditors of the Assets Involved in the Insolvency Proceedings
      20. Section 54: Costs of the Insolvency Proceedings
      21. Section 55: Other Debts incumbent on the Assets Involved in the Insolvency Proceedings
   3. Chapter Three: Insolvency Administrator Bodies Representing the Creditors
      1. Section 56: Designation of an Insolvency Administrator
      2. Section 57: Election of a Different Insolvency Administrator
      3. Section 58: Supervision by the Insolvency Court
      4. Section 59: Dismissal of the Insolvency Administrator
      5. Section 60: Liability of the Insolvency Administrator
      6. Section 61: Nonperformance of Debts incumbent on the Assets Involved in the Insolvency Proceedings
      7. Section 62: Period of Limitation
      8. Section 63: Remuneration of the Insolvency Administrator
      9. Section 64: Determination by the Insolvency Court
      10. Section 65: Empowerment to issue an Order
      11. Section 66: Rendering of Accounts
      12. Section 67: Establishment of the Creditors' Committee
      13. Section 68: Election of Different Members
      14. Section 69: Duties Incumbent on the Creditors' Committee
      15. Section 70: Dismissal
      16. Section 71: Liability of the Members of the Creditors' Committee
      17. Section 72: Decisions of the Creditors' Committee
      18. Section 73: Remuneration of the Members of the Creditors' Committee
      19. Section 74: Convening the Creditors' Assembly
      20. Section 75: Request to Convene a Creditors' Assembly
      21. Section 76: Decisions of the Creditors' Assembly
      22. Section 77: Determination of Voting Right
      23. Section 78: Repeal of a Decision taken by the Creditors' Assembly
      24. Section 79: Information to the Creditors' Assembly
3. Part Three: Effects of the Opening of Insolvency Proceedings
   1. Chapter One: General Effects
      1. Section 80: Right to Manage and Transfer the Assets Involved in the Insolvency Proceedings Vested in the Insolvency Administrator
      2. Section 81: Transfers of Property by the Debtor
      3. Section 82: Performance in Favour of the Debtor
      4. Section 83: Decedent's Estate. Continued Community
      5. Section 84: Liquidation of a Company or a Community
      6. Section 85: Joinder of Pending Actions as Plaintiff
      7. Section 86: Joinder of Certain Pending Actions as Defendant
      8. Section 87: Claims Held by the Creditors of the Insolvency Proceedings
      9. Section 88: Execution prior to the Opening of Insolvency Proceedings
      10. Section 89: Prohibition of Execution
      11. Section 90: Prohibition of Execution under Debts incumbent on the Assets Involved in the Insolvency Proceedings
      12. Section 91: Exclusion of other Acquisition of Rights
      13. Section 92: General Damage
      14. Section 93: Unlimited Liability of Partners
      15. Section 94: Preservation of the Right to Set Off a Claim
      16. Section 95: Acquisition of the Right to Set Off a Claim During the Proceedings
      17. Section 96: Prohibition of Set-Off
      18. Section 97: The Debtor's Obligation to Disclosure and Cooperation
      19. Section 98: Imposition of the Duties of the Debtor
      20. Section 99: Interception of the Debtor's Mail
      21. Section 100: Maintenance Payments using the Assets Involved in the Insolvency Proceedings
      22. Section 101: Members of the Body Representing the Debtor. Employees
      23. Section 102: Restriction of a Basic Right
   2. Chapter Two: Performance of Transactions. Cooperation of the Works Council
      1. Section 103: Option to be Exercised by the Insolvency Administrator
      2. Section 104: Fixed-date Transactions. Financial Futures
      3. Section 105: Severable Contracts
      4. Section 106: Priority Notice
      5. Section 107: Retention of Title
      6. Section 108: Continuity of Severable Contracts
      7. Section 109: Debtor's Status as Tenant or Lessee
      8. Section 110: Debtor's Status as Landlord or Lessor
      9. Section 111: Sale of Property Let by the Debtor
      10. Section 112: Prohibition to Terminate Tenancy or Lease Contracts
      11. Section 113: Termination of a Service contract
      12. Section 114: Emoluments from a Service contract
      13. Section 115: Expiry of Mandates
      14. Section 116: Expiry of Management Contracts
      15. Section 117: Expiry of Proxies
      16. Section 118: Liquidation of Companies
      17. Section 119: Invalidity of Agreements Derogating from the Foregoing Provisions
      18. Section 120: Termination of Plant Agreements
      19. Section 121: Plant Modifications and Conciliatory Proceeding
      20. Section 122: Judicial Approval of a Plant Modification
      21. Section 123: Scope of the Social Plan
      22. Section 124: Social Plan Established prior to the Opening of Insolvency Proceedings
      23. Section 125: Reconciliation of Interests and Dismissals Protection
      24. Section 126: Judicial Orders Deciding on Dismissal Protection
      25. Section 127: Action brought by the Employee
      26. Section 128: Sale of Plant
   3. Chapter Three: Contest of the Debtor's Transactions in Insolvency Proceedings
      1. Section 129: Policy
      2. Section 130: Congruent Coverage
      3. Section 131: Incongruent Coverage
      4. Section 132: Transactions Immediately Disadvantaging the Creditors of the Insolvency Proceedings
      5. Section 133: Wilful Disadvantage
      6. Section 134: Gratuitous Benefit
      7. Section 135: Loans Replacing Equity Capital
      8. Section 136: Silent Partnership
      9. Section 137: Payments on Bills of Exchange and Cheques
      10. Section 138: Persons with a Close Relationship to the Debtor
      11. Section 139: Calculation of Time Periods prior to the Request to Open Insolvency Proceedings
      12. Section 140: Date of Performance of Transaction
      13. Section 141: Executable Deed
      14. Section 142: Cash Transactions
      15. Section 143: Legal Consequences
      16. Section 144: Claims of the Party to the Contested Transaction
      17. Section 145: Transactions Contested and Enforced against Legal Successors
      18. Section 146: Limitation of the Right to Contest
      19. Section 147: Transactions carried out subsequent to the Opening of Insolvency Proceedings
4. Part Four: Management and Disposition of the Assets Involved in the Insolvency Proceedings
   1. Chapter One: Arrestment of the Assets Involved in the Insolvency Proceedings
      1. Section 148: Transfer of the Assets Involved in the Insolvency Proceedings
      2. Section 149: Objects of Value
      3. Section 150: Sealing
      4. Section 151: Record of the Assets Involved in the Insolvency Proceedings
      5. Section 152: Record of Creditors
      6. Section 153: Survey of Property
      7. Section 154: Deposit with the Registry of the Insolvency Court
      8. Section 155: Accounting under Commercial and Fiscal Laws
   2. Chapter Two: Decision on Disposition
      1. Section 156: Report Meeting
      2. Section 157: Decision on the Further Proceedings
      3. Section 158: Measures taken prior to the Decision
      4. Section 159: Disposition of the Assets Involved in the Insolvency Proceedings
      5. Section 160: Transactions of Particular Importance
      6. Section 161: Provisional Prohibition of the Transaction
      7. Section 162: Sale of Plant to Persons with Specific Interests
      8. Section 163: Sale of Plant below Value
      9. Section 164: Legal Validity of the Transaction
   3. Chapter Three: Objects Subject to a Right to Separate Satisfaction
      1. Section 165: Disposition of Immovables
      2. Section 166: Disposition of Movables
      3. Section 167: Notification of the Creditor
      4. Section 168: Notification of Envisaged Sale
      5. Section 169: Protection of the Creditor Against Delayed Disposition
      6. Section 170: Distribution of Proceeds
      7. Section 171: Calculation of the Contribution to Costs
      8. Section 172: Other Use of Movables
      9. Section 173: Disposition by the Creditor
5. Part Five: Satisfaction of the Creditors of the Insolvency Proceedings. Discontinuation of the proceedings
   1. Chapter One: Determination of Claims
      1. Section 174: Filing of Claims
      2. Section 175: Schedule
      3. Section 176: Proceedings of the Verification Meeting
      4. Section 177: Subsequent Filings
      5. Section 178: Prerequisites and Effects of Determination of Claims
      6. Section 179: Denied Claims
      7. Section 180: Competence for the Determination of Claims
      8. Section 181: Scope of Determination
      9. Section 182: Value of Action
      10. Section 183: Effect of the Decision
      11. Section 184: Action to Enforce a Claim Denied by the Debtor
      12. Section 185: Special Jurisdiction
      13. Section 186: Restitutio in Integrum
   2. Chapter Two: Distribution
      1. Section 187: Satisfaction of the Creditors of the Insolvency Proceedings
      2. Section 188: Distribution Record
      3. Section 189: Consideration of Denied Claims
      4. Section 190: Consideration of Creditors with a Right to Separate Satisfaction
      5. Section 191: Consideration of Conditional Claims
      6. Section 192: Subsequent Consideration
      7. Section 193: Amendments to the Distribution Record
      8. Section 194: Objections to the Distribution Record
      9. Section 195: Determination of a Fraction
      10. Section 196: Final Distribution
      11. Section 197: Final Meeting
      12. Section 198: Deposit of Retained Funds
      13. Section 199: Surplus Resulting from Final Distribution
      14. Section 200: Termination of the Insolvency Proceedings
      15. Section 201: Rights of the Creditors of the Insolvency Proceedings subsequent to Termination
      16. Section 202: Jurisdiction for Actions to Enable Execution
      17. Section 203: Judicial Order to Hold Delayed Distribution
      18. Section 204: Appeal
      19. Section 205: Implementation of a Delayed Distribution
      20. Section 206: Exclusion of the Creditors of the Assets Involved in the Insolvency Proceedings
   3. Chapter Three: Discontinuation of Insolvency Proceedings
      1. Section 207: Discontinuation for Lacking Assets Involved in the Insolvency Proceedings
      2. Section 208: Notification of Lacking Assets Involved in the Insolvency Proceedings
      3. Section 209: Satisfaction of the Creditors of the Assets Involved in the Insolvency Proceedings
      4. Section 210: Prohibition of Execution
      5. Section 211: Discontinuation upon Notification of Lacking Assets Involved in the Insolvency Proceedings
      6. Section 212: Discontinuation for Subsequent Lack of Grounds to Open Insolvency Proceedings
      7. Section 213: Discontinuation with the Creditor's Consent
      8. Section 214: Discontinuation Procedure
      9. Section 215: Publication and Legal Effects of Discontinuation
      10. Section 216: Appeal
6. Part Six: Insolvency Plan
   1. Chapter One: Establishment of the Plan
      1. Section 217: Policy
      2. Section 218: Submission of the Insolvency Plan
      3. Section 219: Breakdown of the Plan
      4. Section 220: Declaratory Part
      5. Section 221: Constructive Part
      6. Section 222: Formation of Groups
      7. Section 223: Rights of Creditors Entitled to Separate Satisfaction
      8. Section 224: Rights of the Creditors of the Insolvency Proceedings
      9. Section 225: Rights of Lower-ranking Creditors of the Insolvency Proceedings
      10. Section 226: Equal Treatment of Parties Involved
      11. Section 227: Debtor's Liability
      12. Section 228: Modification of Conditions under Property Law
      13. Section 229: Survey of Assets. Earnings and Finance Plan
      14. Section 230: Further Attachments
      15. Section 231: Refusal of the Plan
      16. Section 232: Comments on the Plan
      17. Section 233: Suspension of Disposition and Distribution
      18. Section 234: Laying Out of Plan
   2. Chapter Two: Acceptance and Confirmation of the Plan
      1. Section 235: Discussion and Voting Meeting
      2. Section 236: Coincidence with the Verification Meeting
      3. Section 237: Voting Right of the Creditors of the Insolvency Proceedings
      4. Section 238: Voting Right of Creditors Entitled to Separate Satisfaction
      5. Section 239: Voting List
      6. Section 240: Modification of the Plan
      7. Section 241: Separate Voting Meeting
      8. Section 242: Voting in Writing
      9. Section 243: Voting by Groups
      10. Section 244: Necessary Majorities
      11. Section 245: Prohibition to Obstruct
      12. Section 246: Consent of Lower-ranking Creditors of the Insolvency proceedings
      13. Section 247: Debtor's Consent
      14. Section 248: Confirmation by the Court
      15. Section 249: Conditioned Plan
      16. Section 250: Contravention of procedural Provisions
      17. Section 251: Protection of Minorities
      18. Section 252: Publication of Decision
      19. Section 253: Appeal
   3. Chapter Three: Effects of the Confirmed Plan. Surveillance of Implementation of the Plan
      1. Section 254: General Effects of the Plan
      2. Section 255: Proviso of Revival
      3. Section 256: Denied Claims. Remaining Claims
      4. Section 257: Execution under the Plan
      5. Section 258: Termination of the Insolvency proceedings
      6. Section 259: Effects of Termination
      7. Section 260: Surveillance of Implementation of the Plan
      8. Section 261: Tasks and Rights of the Insolvency Administrator
      9. Section 262: Obligation to Disclosure incumbent on the Insolvency Administrator
      10. Section 263: Transaction requiring Consent
      11. Section 264: Loan Ceiling
      12. Section 265: Lower-ranking Status of New Creditors
      13. Section 266: Consideration of Lower-ranking Status
      14. Section 267: Publication of Surveillance
      15. Section 268: Termination of Surveillance
      16. Section 269: Costs of Surveillance
7. Part Seven: Personal Management
   1. Section 270: Prerequisites
   2. Section 271: Subsequent Order
   3. Section 272: Repeal of the Order
   4. Section 273: Publication
   5. Section 274: Legal Status of the Custodian
   6. Section 275: Consent of the Custodian
   7. Section 276: Consent of the Creditors' Committee
   8. Section 277: Ordering the Requirement of Consent
   9. Section 278: Funds for the Debtor's Livelihood
   10. Section 279: Mutual Contracts
   11. Section 280: Liability. Contest of the Debtor's Transactions in Insolvency Proceedings
   12. Section 281: Notification of Creditors
   13. Section 282: Disposition of Securities
   14. Section 283: Satisfaction of the Creditors of the Insolvency Proceedings
   15. Section 284: Insolvency Plan
   16. Section 285: Lacking Assets Involved in the Insolvency Proceedings
8. Part Eight: Discharge of Residual Debt
   1. Section 286: Policy
   2. Section 287: Debtor's Request
   3. Section 288: Right of Proposal
   4. Section 289: Decision by the Insolvency Court
   5. Section 290: Refusal of Discharge of Residual Debt
   6. Section 291: Notification of Discharge of Residual Debt
   7. Section 292: Legal Status of Trustee
   8. Section 293: Trustee's Remuneration
   9. Section 294: Equal Treatment of Creditors
   10. Section 295: Obligations of the Debtor
   11. Section 296: Contravention of Obligations
   12. Section 297: Insolvency Offences
   13. Section 298: Coverage of the Trustee's Minimum Remuneration
   14. Section 299: Expiry before Date
   15. Section 300: Decision on Discharge of Residual Debt
   16. Section 301: Effect of Discharge of Residual Debt
   17. Section 302: Excepted Claims
   18. Section 303: Retraction of Discharge of Residual Debt
9. Part Nine: Consumer Insolvency Proceedings and other Minor Proceedings
   1. Chapter One: Scope of Application
      1. Section 304: Principle
   2. Chapter Two: Plan for the Settlement of Debts
      1. Section 305: Debtor's Request to open Insolvency Proceedings
      2. Section 305: a Failure of Out-of-Court Debt Settlement
      3. Section 306: Suspension of Proceedings
      4. Section 307: Service on the Creditors
      5. Section 308: Acceptance of the Plan for the Settlement of Debts
      6. Section 309: Replacement of Approval
      7. Section 310: Costs
   3. Chapter Three: Simplified Insolvency Proceedings
      1. Section 311: Initiation of the Proceedings concerning Opening of Insolvency Proceedings
      2. Section 312: General Procedural Simplifications
      3. Section 313: Trustees
      4. Section 314: Simplified Distribution
10. Part Ten: Special Types of Insolvency Proceeding
    1. Chapter One: Insolvency Proceeding of a Decedent's Estate
       1. Section 315: Local Jurisdiction
       2. Section 316: Admissibility of the Opening of Insolvency Proceedings
       3. Section 317: Persons Entitled to Request the Opening of Insolvency Proceedings
       4. Section 318: Entitlement to Make the Request for the Joint Marital Property
       5. Section 319: Request Deadline
       6. Section 320: Reasons for Opening
       7. Section 321: Execution following Succession
       8. Section 322: Contestable Transactions on the Part of' the Heir
       9. Section 323: The Heir's Expenses
       10. Section 324: Debts incumbent on the Assets Involved in the Insolvency Proceedings
       11. Section 325: Obligations incumbent on the Estate
       12. Section 326: The Heirs' Claims
       13. Section 327: Lower-ranking Obligations
       14. Section 328: Restituted Objects
       15. Section 329: Revisionary Succession
       16. Section 330: Purchase of a Decedent's Estate
       17. Section 331: Simultaneous Insolvency of the Heir
    2. Chapter Two: Insolvency Proceedings relating to the Joint Marital Property with Continued Community
       1. Section 332: Transfer to Insolvency Proceedings opened for an Estate
    3. Chapter Three: Insolvency Proceedings relating to the Jointly Administered Joint Marital Property of a Community
       1. Section 333: Right to file a Request. Grounds for Opening Proceedings
       2. Section 334: Personal Liability of the Spouses
11. Part Eleven: Entering into Force
    1. Section 335: Referral to Introductory Act

Insolvency Statute (Insolvenzordnung, InsO)

Part One: General Provisions

Section 1: Objectives of the Insolvency Proceedings

The insolvency proceedings shall serve the purpose of collective satisfaction of a debtor's creditors by liquidation of the debtor's assets and by distribution of the proceeds, or by reaching an arrangement in an insolvency plan, particularly in order to maintain the enterprise. Honest debtors shall be given the opportunity to achieve discharge of residual debt.

Section 2: Jurisdiction of the Local Court as Insolvency Court

(1) The Local Court in whose district a Regional Court is located shall have exclusive jurisdiction for insolvency proceedings as the insolvency court for the district of such Regional Court.

(2) The governments of the Länder shall be empowered to designate other or additional Local Courts as insolvency courts by means of a legal ordinance for the purposes of expedient furtherance or expedited conduct of proceedings, and to determine different districts of insolvency courts. The governments of the Länder may delegate such power to the judicial administrations of the Länder.

Section 3: Local Jurisdiction

(1) The insolvency court in whose district the debtor has his usual venue shall have exclusive local jurisdiction. If the centre of the debtor's self-employed business activity is located elsewhere, the insolvency court in whose district such place is located shall have exclusive jurisdiction.

(2) If several courts have jurisdiction, the court first requested to open the insolvency proceedings shall exclude any other jurisdiction.

Section 4: Applicability of the Code of Civil Procedure (Zivilprozessordnung)

Unless this statute provides otherwise the provisions contained in the Code of Civil Procedure shall apply to the insolvency proceedings mutatis mutandis.

Section 4a: Deferment of the Costs of the Insolvency Proceedings

(1) If the debtor is an individual and if he has made a request for discharge of residual debt, the cost of the insolvency proceedings shall be deferred on request until such time as discharge of residual debt is awarded, insofar as his assets are likely not to be sufficient to cover these costs. Deferment in accordance with the first sentence shall also cover the costs of the proceedings regarding the plan for the settlement of debts and the proceedings for discharge of residual debt. The debtor shall enclose with the request a declaration as to whether one of the grounds for refusal contained in section 290 subs. 1 Nos. 1 and 3 pertains. Deferment shall be ruled out if such a reason pertains.

(2) If the cost of the proceedings are deferred to the debtor, on request a lawyer of his choice shall be appointed who is willing to represent him if representation by counsel appears to be necessary in spite of the duty of assistance incumbent on the court.

Section 121 subs. 3 to 5 of the Code of Civil Procedure shall apply mutatis mutandis.

(3) The effect of deferment shall be as follows:

1. the Federal or Land cash office may claim

a) court costs in arrears and those arising,

b) the claims of the appointed lawyer which transfer to the cash office against the debtor only in accordance with the provisions made by the court;

2. the appointed lawyer is unable to assert claims for fees against the debtor. Deferment shall be effected separately in respect of each stage of the proceedings. Until such time as a decision is made regarding deferment, the effects specified in the first sentence shall apply on an interim basis. Section 4b subs. 2 shall apply mutatis mutandis.

Section 4b: Repayment and Adjustment of the Deferred Amounts

(1) If the debtor is unable once discharge of residual debt has been awarded to pay the deferred amount from his income and his assets, the court may extend deferment and set the monthly instalments to be paid. Section 115 subs. 1 and 2, as well as section 120 subs. 2, of the Code of Civil Procedure shall apply mutatis mutandis.

(2) The court may alter the ruling regarding the deferment and the monthly instalments at any time insofar as any personal or economic circumstances relevant to the deferment have undergone major changes. The debtor shall be obliged to report to the court a major change in these circumstances without delay. Section 120 subs. 4 first and second sentences of the Code of Civil Procedure shall apply mutatis mutandis. A change placing the debtor at a disadvantage shall be ruled out if four years have passed since termination of the proceedings.

Section 4c: Rescission of Deferment

The court may rescind deferment if

1. the debtor intentionally or with gross negligence has provided incorrect information regarding circumstances relevant to the opening of the insolvency proceedings or to the deferment, or has not submitted a declaration required by the court regarding his circumstances;

2. the personal or economic preconditions for deferment did not apply; in such a case, rescission shall be ruled out if four years have passed since termination of the proceedings;

3. the debtor is more than three months in arrears in respect of payment of a monthly instalment or of the payment of another amount and such arrears are his fault;

4. the debtor is not in suitable gainful employment and, if he is unemployed, is not looking for employment or rejects acceptable employment; section 296 subs. 2 second and third sentences shall apply mutatis mutandis;

5. discharge of residual debt is refused or revoked.

Section 4d: Legal recourse

(1) Immediate complaint shall be available to the debtor against refusal to defer or rescission of deferment, as well as against refusal to appoint a lawyer.

(2) If deferment is approved, the state cash office shall be entitled to file an immediate complaint. The latter may only be based on the fact that deferment should have been rejected given the personal or economic circumstances of the debtor.

Section 5: Principles of the Insolvency Proceedings

(1) The insolvency court shall investigate ex officio all circumstances relevant to insolvency proceedings. In particular, the court may hear witnesses and experts for this purpose.

(2) The court may take decisions without an oral hearing. If an oral hearing takes place, section 227 subs. 3 first sentence of the Code of Civil Procedure shall not apply.

(3) Tables and records may be prepared and processed using computer equipment.

Section 6: Immediate Appeal

(1) Decisions of the insolvency court may be only appealed if this statute provides for an immediate appeal.

(2) The period within which an immediate appeal has to be brought shall begin on the day when the court promulgates its decision or when a decision is served on the parties if not promulgated.

(3) The decision regarding the appeal shall only be effective when it becomes final. However, the court hearing the appeal may order immediate effectiveness of the decision.

Section 7: Appeal on Points of Law

An appeal on points of law may lie against the decision on the immediate appeal.

Section 8: Service

(1) Documents shall be served ex officio. They may be served by mail. The documents to be served shall not require certification.

(2) Service shall not be made to persons with unknown residence. If such persons have a representative empowered to receive any documents to be served, the documents shall be served on such representative.

(3) The insolvency court may instruct the insolvency administrator to serve the documents.

Section 9: Publication

(1) Publication shall by made by notification in the gazette or in an electronic information and communication system intended for the court; such publication maybe restricted to excerpts. Documents to be published shall mention the debtor's particulars with special reference to his address and his branch of business. Such publication shall be deemed to have been effected when two additional days following the day of publication have expired.

(2) The insolvency court may occasion additional and repeated publications. The Federal Ministry of Justice shall be empowered to govern the details of publication in an electronic information and communication system by means of an ordinance which shall require the approval of the Bundesrat. In doing so, in particular deletion periods shall be provided for, as shall regulations ensuring that the publications

1. remain intact, complete and up-to-date,

2. can be traced to their source at any time,

3. cannot be copied by third parties in accordance with the state-of-the-art of existing technology.

(3) Publication shall suffice as evidence of service on all parties to the proceedings even if any provision additionally orders individual service.

Section 10: Hearing of the Debtor

(1) If any provision requires a hearing of the debtor such hearing may be waived if the debtor is resident in a foreign country and such hearing would unreasonably delay the proceedings, or if the debtor's residence is unknown. In such a case a representative or relation of the debtor should be heard.

(2) If the debtor is not an individual subs. 1 shall apply mutatis mutandis to the hearing of persons entitled to represent the debtor or holding his shares.

Part Two: Opening of the Insolvency Proceedings. Involved Assets and Parties.

Chapter One: Prerequisites of Opening and Opening Proceedings

Section 11: Admissibility of Insolvency Proceedings

(1) Insolvency proceedings may be opened for the assets owned by any individual or corporation. An unincorporated association in this respect shall be deemed equivalent to a corporation.

(2) Insolvency proceedings may also be opened for:

1. the assets owned by a company without legal personality (general commercial company, limited partnership, professional partnership, company under the Civil Code, shipping company, EEIG);

2. under sections 315 to 334, the estate of a deceased person, the joint marital property of a continued community or the marital property of a community jointly administered by both spouses.

(3) After liquidation of a corporation or a company without legal personality, insolvency proceedings may be opened as long as the assets have not been distributed.

Section 12: Corporations under Public Law

(1) Insolvency proceedings may not be opened for the assets owned by

1. the Federation or a Land;

2. a corporation under public law supervised by a Land if the law of the Land exempts such corporation from insolvency proceedings.

(2) If the law of a Land exempts the assets owned by a corporation from insolvency proceedings under subs. 1 No. 2, the employees of such corporation in case of its illiquidity or overindebtedness may apply to the Land for benefits due to them in case of insolvency proceedings opened under the provisions of the Third Book of the Social Code (Drittes Buch Sozialgesetzbuch) governing insolvency substitute benefits from the Employment Office and under the provisions of the Act to Improve Occupational Pensions (Gesetz zur Verbesserung der betrieblichen Altersversorgung) from the institution ensuring insolvency insurance.

Section 13: Request to Open Insolvency Proceedings

(1) Insolvency proceedings shall be opened on request only. Such request may be filed by the creditors and by the debtor.

(2) Such request may be withdrawn until the insolvency court opens the insolvency proceedings or the request has been refused with final effect.

Section 14: Request by the Creditor

(1) A creditor's request shall be admissible if he has a legal interest in the opening of the insolvency proceedings and shows his claim, and the reason why insolvency proceedings should be opened, to the satisfaction of the court.

(2) If a request is admissible the insolvency court shall hear the debtor.

Section 15: Entitlement to Request the Opening of Insolvency Proceedings for the Assets Owned by Corporations and for those Owned by Companies without Legal Personality

(1) As well as the creditors, any member of the board of directors of a corporation or, in the case of a company without legal personality or of a partnership limited by shares, any general partner, and any liquidator shall be entitled to request the opening of insolvency proceedings for the assets owned by such corporation or company without legal personality.

(2) If such request is not filed by all members of the board of directors, all general partners or all liquidators, it shall be admissible if the reason why insolvency proceedings should be opened is shown to the satisfaction of the court. The insolvency court shall hear the other members of the board of directors, general partners or liquidators.

(3) If in the case of a company without legal personality none of the general partners is an individual, subs. 1 and 2 shall apply mutatis mutandis to the members of the board of directors, to the general partners and to the liquidators of the partners empowered to represent the company. The same shall apply if the grouping of companies continues in this way.

Section 16: Reason to Open Insolvency Proceedings

The opening of insolvency proceedings shall require the existence of a reason to open such proceedings.

Section 17: Illiquidity

(1) Illiquidity shall be the general reason to open insolvency proceedings.

(2) The debtor shall be deemed illiquid if he is unable to meet his mature obligations to pay. Illiquidity shall be presumed as a rule if the debtor has stopped payments.

Section 18: Imminent Illiquidity

(1) If the debtor requests the opening of insolvency proceedings imminent illiquidity shall also be a reason to open.

(2) The debtor shall be deemed to be faced with imminent illiquidity if he is likely to be unable to meet his existing obligations to pay on the date of their maturity.

(3) If in the case of a corporation, or of a company without legal personality, the request is not filed by all members of the board of directors, all general partners or all liquidators, subs. 1 shall only apply if the person or persons filing the request are empowered to represent the company or the partnership.

Section 19: Overindebtedness

(1) Overindebtedness shall be also a reason to open insolvency proceedings for a corporation.

(2) Overindebtedness shall exist if the assets owned by the debtor no longer cover his existing obligations to pay. In the assessment of the debtor's assets, however, the continuation of the enterprise shall be taken as a basis if according to the circumstances such continuation is deemed highly likely.

(3) If none of the general partners of a company without legal personality is an individual, subs. 1 and 2 shall apply mutatis mutandis. This shall not apply if the general partners include another company with an individual as general partner.

Section 20: Obligation of Disclosure during the Opening Proceeding, Reference to Discharge of Residual Debt

(1) If the request to open insolvency proceedings is admissible the debtor shall disclose to the insolvency court such information as is necessary for a decision on the request. Sections 97, 98 and 101 subs. 1 first and second sentences, and subs. 2, shall apply mutatis mutandis.

(2) If the debtor is an individual, he shall be informed that he may obtain discharge of residual debt in accordance with sections 286 to 303.

Section 21: Decisions Ordering Arrestment

(1) The insolvency court shall take all measures appearing necessary in order to avoid any detriment to the financial status of the debtor for the creditors until the insolvency court decides on the request. The debtor shall be entitled to file an immediate complaint against the ordering of the measure.

(2) In particular, the court may

1. designate a temporary insolvency administrator to whom sections 8 subs. 3, as well as sections 56 and 58 to 66 shall apply mutatis mutandis;

2. impose a general prohibition of transfers on the debtor or order that the debtor's transfers of property shall require the consent of the temporary insolvency administrator in order to become effective;

3. order a restriction or temporary restriction on measures of execution against the debtor unless immovables are involved;

4. order a temporary interception of the debtor's mail in respect of which sections 99 and 101 subs. 1 first sentence shall apply mutatis mutandis.

(3) If other measures prove to be insufficient the court may sub poena the debtor and have him detained after hearing him. If the debtor is not an individual the same shall apply to his directors or general partners. Section 98 subs. 3 shall apply mutatis mutandis to the ordering of detention.

Section 22: Legal Status of the Temporary Insolvency Administrator

(1) If the insolvency court designates a temporary insolvency administrator and imposes a general prohibition of transfers on the debtor the right to manage and transfer the debtor's property shall be vested in the temporary insolvency administrator. In such cases the temporary insolvency administrator shall:

1. see to the arrestment and preservation of the debtor's property;

2. continue an enterprise operated by the debtor until the insolvency court decides on the opening of the insolvency proceedings, unless the insolvency court consents to a close-down of such enterprise in order to avoid a considerable loss of the debtor's property;

3. verify whether the debtor's property will cover the costs of the insolvency proceedings; in addition, the insolvency court may charge him as an expert with verification of whether a reason to open insolvency proceedings exists, and which prospects exist for the continuation of the debtor's enterprise.

(2) If the insolvency court designates a temporary insolvency administrator without imposing a general prohibition of transfers on the debtor the court shall determine the duties of such temporary insolvency administrator. Such duties may not exceed the duties under subs. 1 second sentence.

(3) The temporary insolvency administrator shall be entitled to enter the debtor's business premises and to investigate there. The debtor shall grant the temporary insolvency administrator inspection of his books and business documents. The debtor must disclose to him any necessary information; sections 97, 98 and 101 subs. 1 first and second sentences and subs. 2 shall apply mutatis mutandis.

Section 23: Publication of Restriction on Property Transfers

(1) The decision ordering any of the restrictions on property transfers mentioned at section 21 subs. 2 No. 2 and designating a temporary insolvency administrator shall be published. It shall be individually served on the debtor, on any person with an obligation to the debtor, and on the temporary insolvency administrator. At the same time the debtor's obligors shall be required to meet their obligations to the debtor exclusively in compliance with the order.

(2) If the debtor is registered in a Commercial Register, in a Register of Cooperatives, in a Register of Partnerships or in a Register of Associations the registry of the insolvency court shall send a copy of such order to the registering court.

(3) Sections 32 and 33 shall apply mutatis mutandis to the registration of restrictions on property transfers in the land register, the register of ships and the register of ships under construction, as well as in the register of liens on aircraft.

Section 24: Effects of Restrictions on Property Transfers

(1) Sections 81 and 82 shall apply mutatis mutandis to any contravention of the restrictions on property transfers mentioned at section 21 subs. 2 No. 2.

(2) If the right to transfer the debtor's property has been vested in a temporary insolvency administrator, section 85 subs. 1 first sentence and section 86 shall apply mutatis mutandis to pending actions.

Section 25: Repeal of Measures of Arrestment

(1) If the measures of arrestment are repealed, section 23 shall apply mutatis mutandis to the publication of the repeal of a restriction on property transfer.

(2) If the right to transfer the debtor's property has been vested in a temporary insolvency administrator he shall settle any costs incurred using the property administered by him and meet any obligation entered into by him before his designation is repealed. The same shall apply to obligations under continuing obligations if the temporary insolvency administrator has received the consideration under such contract for the property administered by him.

Section 26: Refusal for Lacking Assets

(1) The insolvency court shall refuse a request to open insolvency proceedings if the debtor's assets will probably be insufficient to cover the costs of the proceedings. Such refusal shall be excluded if a sufficient amount of money is advanced, or the costs have been deferred in accordance with Section 4a.

(2) The court shall enter any debtor for whom a request to open insolvency proceedings has been refused for lacking assets into a record (record of debtors). The provisions governing the record of debtors under the Code of Civil Procedure shall apply mutatis mutandis; the entry shall however be cancelled after a period of five years.

(3) Anyone advancing an amount of money under subs. 1 second sentence may claim reimbursement of the advanced amount by any person who, in contravention of the provisions of company law, as well as in contravention of his duties and wrongfully, has not requested the opening of insolvency proceedings. Failing agreement as to whether such person has acted in contravention of his duties and wrongfully in refraining from such request, the burden of proof shall shift to him. The claim shall be subject to limitation after five years.

Section 27: Order Opening the Insolvency Proceedings

(1) If insolvency proceedings are opened the insolvency court shall designate an insolvency administrator. Sections 270 and 313 subs. 1 shall remain unaffected.

(2) The order opening the insolvency proceedings shall specify:

1. the business name or name and first names, branch of business or occupation, commercial establishment or place of abode of the debtor;

2. the name and address of the insolvency administrator;

3. the hour when the insolvency proceedings were opened.

(3) If the order does not specify the hour when the insolvency proceedings were opened the moment of opening shall be deemed the noon of the day when the order was issued.

Section 28: Requirements Incumbent on the Creditors and Debtors

(1) In the order opening the insolvency proceedings the creditors shall be required to file their claims in compliance with section 174 with the insolvency administrator within a definite period of time. Such period of time shall be fixed to extend over not less than two weeks and not more than three months.

(2) In the order opening the insolvency proceedings the creditors shall be required immediately to inform the insolvency administrator which security interests they claim to have in personal property or rights of the debtor. Details are to be provided of the object of the claimed security interest, the nature and causal origin of the security interest, as well as the secured claim. Any person who by fault omits to provide this information, or provides it late, shall be liable for the consequent damage.

(3) In the order opening the insolvency proceedings, those persons having obligations to the debtor shall be required no longer to fulfil these obligations to the debtor, but to the administrator.

Section 29: Docketing of Meetings

(1) In the order opening the insolvency proceedings the insolvency court shall docket meetings for:

1. a creditors' assembly deciding on the continuation of the insolvency proceedings based on the insolvency administrator's report (report meeting); such meeting shall be docketed within six weeks and must not be docketed more than three months later;

2. a creditors' assembly verifying the filed claims (verification meeting); the period of time between expiry of the period to file claims and the verification meeting shall extend over not less than one week and not more than two months.

(2) The meetings may coincide.

Section 30: Publication of the Order Opening the Insolvency Proceedings

(1) The registry of the insolvency court shall publish the order opening the insolvency proceedings immediately. Notwithstanding Section 9 remaining unaffected, the notification is to be published in extract form in the Federal Bulletin.

(2) The order shall be served individually on the debtor's creditors and obligors and on the debtor himself.

Section 31: Commercial Register, Register of Cooperatives, Register of Partnerships and Register of Associations

If the debtor is registered in a Commercial Register, in a Register of Cooperatives, in a Register of Partnerships or in a Register of Associations, the registry of the insolvency court shall send to the registering court:

1. a copy of the order opening the insolvency proceedings if insolvency proceedings have been opened;

2. a copy of the order refusing the opening of insolvency proceedings if the opening of insolvency proceedings has been refused for lacking assets, and if the debtor is a corporation or a company without legal personality liquidated by such refusing order.

Section 32: Land Register

(1) The opening of insolvency proceedings shall be entered in the Land Register:

1. for any parcel of real estate with the debtor registered as owner;

2. for the debtor's registered rights to real estate or to registered rights if the type of such rights and the circumstances give rise to the suspicion that the creditors of the insolvency proceedings would be placed at a disadvantage without such entry.

(2) If the insolvency court is aware of such parcels of real estate or such rights it shall request entry by the Land Register ex officio. Such entry may also be requested from the Land Register Office by the insolvency administrator.

(3) If the administrator releases or sells a parcel of real estate or a right for which the opening of the insolvency proceedings has been registered, the insolvency court shall request the Land Register to delete such entry. Such deletion may also be requested from the Land Register Office by the administrator.

Section 33: Ship/Aircraft Register

Section 32 shall apply mutatis mutandis to the registration of the opening of insolvency proceedings in the register of ships and the register of ships under construction, as well as in the register of liens on aircraft. In such a case the parcels of real estate shall be replaced by the ships, ships under construction and aircraft entered in such registers, and the land register by the registering court, respectively.

Section 34: Appeal

(1) If the opening of the insolvency proceedings is refused the requesting party, and the debtor if the request was refused under section 26, may bring an immediate appeal.

(2) If the insolvency proceedings are opened the debtor may bring an immediate appeal.

(3) As soon as a decision repealing the order opening insolvency proceedings has become effective such termination of the insolvency proceedings shall be published. Section 200 subs. 2 second and third sentences shall apply mutatis mutandis. The legal effects of transactions executed by the insolvency administrator or by third parties with respect to him shall remain unaffected by such termination.

Chapter Two: Assets Involved in the Insolvency Proceedings. Classification of Creditors

Section 35: Definition of the Assets Involved in the Insolvency Proceedings

The insolvency proceedings shall involve all of the assets owned by the debtor on the date when the proceedings were opened and those acquired by him during the proceedings (assets involved in the insolvency proceedings).

Section 36: Objects not Subject to Attachment

(1) Objects not subject to execution shall not form part of the assets involved in the insolvency proceedings. Sections 850, 850a, 850c, 850e, 850f subs. 1 and sections 850g to 850i of the Code of Civil Procedure shall apply mutatis mutandis.

(2) However, the assets involved in the insolvency proceedings shall involve

1. the debtor's business records; any legal obligation governing storage of such documents shall remain unaffected;

2. objects not subject to execution under section 811 subs. 1 Nos. 4 and 9 of the Code of Civil Procedure.

(3) Objects forming part of the debtor's usual household and used in his household shall not form part of the assets involved in the insolvency proceedings if their disposition would obviously yield not more than proceeds largely disproportionate to their value.

(4) The insolvency court shall have jurisdiction in respect of rulings as to whether an object is subject to coercive execution in accordance with the provisions specified in subs. 1 second sentence. Instead of a creditor, the insolvency administrator shall be entitled to make a request. The first and second sentences shall apply mutatis mutandis in respect of the opening proceedings.

Section 37: Joint Marital Property of a Community

(1) If the joint marital property of a community is administered by one spouse only and insolvency proceedings are opened for the assets owned by such spouse, the assets involved in the insolvency proceedings shall involve the joint marital property. The joint marital property shall not be distributed among the spouses. Insolvency proceedings opened for the assets owned by the other spouse shall leave the joint marital property unaffected.

(2) If the joint marital property is administered by both spouses insolvency proceedings opened for the assets owned by any spouse shall leave the joint marital property unaffected.

(3) Subs. 1 shall apply to a continued community with the proviso that the spouse administering the joint marital property alone shall be replaced by the surviving spouse, and the late spouse by his descendants, respectively.

Section 38: Definition of the Creditors of the Insolvency proceedings

The assets involved in the insolvency proceedings shall serve to satisfy the liquidated claims held by the personal creditors against the debtor on the date when the insolvency proceedings were opened (creditors of the insolvency proceedings).

Section 39: Lower-ranking Creditors of the Insolvency proceedings

(1) The following claims shall be satisfied ranking below the other claims of creditors of the insolvency proceedings in the order given below, and according to the proportion of their amounts if ranking with equal status:

1. the interest accruing on the claims of the creditors of the insolvency proceedings from the opening of the insolvency proceedings;

2. the costs incurred by individual creditors of the insolvency proceedings due to their participation in the proceedings;

3. fines, administrative penalties, coercive penalty payments, as well as such incidental legal consequences of a criminal or administrative offence binding the debtor to pay money;

4. claims to the debtor's gratuitous performance of a consideration;

5. claims to the refund of loans borrowed from a partner and replacing equity capital, or claims having the same rank as these.

(2) Claims which the creditor and the debtor agreed to be non-privileged in insolvency proceedings shall be satisfied after the claims mentioned at subs. 1 if the agreement does not provide otherwise.

(3) Interest accruing on the claims of non-privileged creditors of the insolvency proceedings, and the costs incurred by such creditors due to their participation in the proceedings shall rank with equal status as the claims of such creditors.

Section 40: Claims to Maintenance

Claims to maintenance under family law against the debtor may be filed in insolvency proceedings for the period after the opening of such proceedings only to the extent to which the debtor would be held liable as the heir of the obligated person. Section 100 shall remain unaffected.

Section 41: Immature Claims

(1) Immature claims shall be deemed to be mature.

(2) If such claims do not bear interest they shall be discounted at the statutory rate of interest. Thereby they shall be reduced to the amount corresponding to the full amount of such claim if the statutory rate of interest for the period from the opening of the insolvency proceedings to its maturity is added.

Section 42: Claims Subject to a Resolutory Condition

Claims subject to a resolutory condition shall be taken into account in the insolvency proceedings as claims not subject to a resolutory condition as long as such condition is not accomplished.

Section 43: Liability Incumbent on Several Persons

A creditor holding claims against several persons for the whole of one single payment may file the full amount in insolvency proceedings against any debtor until he is fully satisfied if he had a claim to such full amount on the date when the insolvency proceedings were opened.

Section 44: Rights of Obligors Liable Jointly and Severally and of Guarantors

Obligors liable jointly and severally and guarantors may file a claim to be acquired by them in the future against the debtor by satisfaction of the creditor only if the creditor does not file his claim.

Section 45: Conversion of Claims

Non-liquidated claims or contingent claims shall be filed at the value estimated for the date when the insolvency proceedings were opened. Claims expressed in foreign currency or in a mathematical unit shall be converted into German currency according to the exchange value applicable at the time of the opening of the proceedings at the place of payment.

Section 46: Recurring Payments

Claims to recurring payments with a definite amount and for a definite period shall be filed with the amount resulting from the addition of all open payments reduced by the discount mentioned at section 41. If the period of such payments is indefinite section 45 first sentence shall apply mutatis mutandis.

Section 47: Right to Separation

Anyone entitled to claim the separation of an object from the assets involved in the insolvency proceedings under a right in rem or in personam shall not form part of the creditors of the insolvency proceedings. Entitlement to separation of such object shall be governed by the legal provisions applying outside the insolvency proceedings.

Section 48: Right to Separation Extending to the Consideration received as a Substitute for the Object of Separation

If, prior to opening of the insolvency proceedings by the debtor, or subsequent to the opening, an object for which separation might have been claimed has been sold by the insolvency administrator without entitlement, anyone with a right to separation may claim assignment of the right to its consideration as long as such consideration has not been paid He may claim such consideration from the assets involved in the insolvency proceedings to the extent to which such consideration continues to exist in a distinct form among the assets involved in the insolvency proceedings.

Section 49: Separate Satisfaction from Immovables

Creditors with a right to satisfaction from objects subject to execution into immovables (immovable objects) shall be entitled to separate satisfaction under the provisions of the Act Governing Auctions and Sequestrations of Immovables (Gesetz über die Zwangsversteigerung und die Zwangsverwaltung).

Section 50: Separate Satisfaction of Pledgees

(1) Creditors holding a contractual pledge, a pledge acquired by attachment or a legal lien in an object forming part of the assets involved in the insolvency proceedings shall be entitled to separate satisfaction in respect of main claim, interest and costs from the pledged object under sections 166 to 173.

(2) The landlord's or lessor's legal lien may not be claimed in insolvency proceedings for rent or lease payments covering an earlier period than the last twelve months foregoing the opening of the insolvency proceedings, and for any damages to be paid due to the termination of such lease by the insolvency administrator. Liens held by lessors of agricultural land shall not be subject to such restriction with respect to the lease payment.

Section 51: Other Creditors with a Claim to Separate Satisfaction

The following creditors shall be deemed equal with those specified under section 50:

1. creditors to whom the debtor has assigned a movable item or a right in order to secure a claim;

2. creditors with a right to withhold an object in consideration of their improvement of the object as far as their claim from such improvement does not exceed the still existing improvement;

3. creditors with a right to withhold an object under the provisions of the Commercial Code;

4. the Federation, the Länder, the communes and commune associations with regard to objects subject to custom duties and tax under legal provisions to secure the payment of public dues.

Section 52: Elimination of Creditors with a Right to Separate Satisfaction

Creditors with a right to separate satisfaction shall be deemed creditors of the insolvency proceedings if they also have a personal claim against the debtor. However, they shall be entitled to proportionate satisfaction of their claim from the assets involved in the insolvency proceedings only to the extent that they waive their right to separate satisfaction, or that such separate satisfaction has failed.

Section 53: Creditors of the Assets Involved in the Insolvency Proceedings

The assets involved in the insolvency proceedings shall be used to settle in advance the costs of the insolvency proceedings and the other debts incumbent on the assets involved in the insolvency proceedings.

Section 54: Costs of the Insolvency Proceedings

The following shall be deemed costs of the insolvency proceedings:

1. the court fees in respect of the insolvency proceedings;

2. the remuneration earned and the expenses incurred by the temporary insolvency administrator, by the insolvency administrator and by the members of the creditors' committee.

Section 55: Other Debts incumbent on the Assets Involved in the Insolvency Proceedings

(1) The following debts shall be deemed as further debts incumbent on the assets involved in the insolvency proceedings:

1. debts created by activities of the insolvency administrator or in another way by the administration, disposition and distribution of the assets involved in the insolvency proceedings without belonging to the costs of the insolvency proceedings;

2. obligations under mutual contracts claimed to be performed to the credit of the assets involved in the insolvency proceedings or to be settled after the opening of the insolvency proceedings;

3. obligations due to restitution for unjust enrichment of the assets involved in the insolvency proceedings.

(2) Obligations created by a temporary insolvency administrator in whom the right to transfer the debtor's property was vested after the opening of the insolvency proceedings shall be deemed as debts incumbent on the assets involved in the insolvency proceedings. The same shall apply to obligations under a continuing obligation if the temporary insolvency administrator has received the consideration to the credit of the assets administered by him.

(3) If in accordance with subs. 2 reasoned wage claims in accordance with section 187 of the Third Book of the Social Code transfer to the Federal Employment Service, the Federal Service may only claim these as a creditor of the insolvency proceedings. The first sentence shall apply mutatis mutandis in respect of the claims specified in section 208 subs. 1 of the Third Book of the Social Code to the extent that these are upheld against the debtor.

Chapter Three: Insolvency Administrator Bodies Representing the Creditors

Section 56: Designation of the Insolvency Administrator

(1) The insolvency court shall designate an independent individual suited to the case at hand, particularly experienced in business affairs and independent of the creditors and of the debtor as insolvency administrator.

(2) The insolvency administrator shall receive a letter documenting his designation. Upon termination of his office he shall return such letter to the insolvency court.

Section 57: Election of a Different Insolvency Administrator

During the first meeting of creditors subsequent to the designation of the insolvency administrator the creditors may elect a different person to replace him. The different person shall be elected if in addition to the majority specified in section 76 subs. 2, the majority of the voting creditors has also voted for him. The court may refuse designation only of a person unqualified to assume such an office. Any creditor of the insolvency proceedings may bring an immediate appeal against a refusal of designation.

Section 58: Supervision by the Insolvency Court

(1) The insolvency administrator shall be subject to supervision by the insolvency court. The court may require him at any time to give specific information or to report on the progress of the proceedings and on the management.

(2) If the insolvency administrator does not fulfil his duties, subsequent to a warning the court may impose an administrative fine on him. An individual administrative fine may not exceed the sum of fifty thousand Deutsche Mark. The administrator may bring an immediate appeal against the decision.

(3) Subs. 2 shall apply mutatis mutandis to the implementation of the obligation to return assets in respect of an administrator who has been dismissed.

Section 59: Dismissal of the Insolvency Administrator

(1) The insolvency court may dismiss the insolvency administrator for an important reason. Such dismissal may be ordered ex officio or at the request of the administrator, of the creditors' committee or of the creditors' assembly. The court shall hear the administrator before taking its decision.

(2) The administrator may bring an immediate appeal against his dismissal. The administrator himself, the creditors' committee or any creditor of the insolvency proceedings, if the creditors' assembly requested the administrator's dismissal, may bring an immediate appeal against an order refusing the dismissal of the administrator.

Section 60: Liability of the Insolvency Administrator

(1) The insolvency administrator shall be held liable to damages for all parties to the proceedings if he wrongfully violates the duties incumbent on him under this statute. He shall ensure the careful action of a proper and diligent insolvency administrator.

(2) If for the fulfilment of the duties incumbent on him as administrator he has to employ any not obviously unqualified wage-earners of the debtor within the scope of their former activities, pursuant to section 278 of the Civil Code, the administrator shall not be responsible for errors made by these persons, but shall be responsible for supervising them, as well as for decisions of particular importance.

Section 61: Nonperformance of Debts incumbent on the Assets Involved in the Insolvency Proceedings

If a debt incumbent on the assets involved in the insolvency proceedings created by a legal transaction of the insolvency administrator cannot be fully satisfied from the assets involved in the insolvency proceedings the administrator shall be held liable to damages for the creditor with a claim to the assets involved in the insolvency proceedings. This shall not apply if the administrator in creating such debt could not be aware of the probable insufficiency of the assets involved in the insolvency proceedings for performance.

Section 62: Period of Limitation

A claim to damages arising from a breach of duty on the part of the insolvency administrator shall be subject to limitation after three years beginning on the date when the injured party becomes aware of the damage and of the circumstances' warranting the administrator's liability to damages. Such claim shall be subject to limitation at the latest after three years beginning on the date of termination of the insolvency proceedings or when the order discontinuing such proceedings became final. The second sentence shall apply to violation of duties committed under delayed distribution (section 203) or under surveillance of implementation of the plan (section 260) with the proviso that termination of the insolvency proceedings shall be replaced by the execution of delayed distribution or the termination of surveillance, respectively.

Section 63: Remuneration of the Insolvency Administrator

(1) The insolvency administrator shall be entitled to remuneration in consideration of execution of his office, and to reimbursement of his adequate expenses. The ordinary rate of such remuneration shall be calculated based on the value of the assets involved in the insolvency proceedings when they are terminated. The scope and complexity of the administrator's execution of his office shall be taken into account by derogating from the ordinary rate.

(2) If the costs of the proceedings have been deferred in accordance with section 4a, the insolvency administrator shall have a claim against the state cash office in respect of his payment and his expenses insofar as the insolvency assets are insufficient therefor.

Section 64: Determination by the Insolvency Court

(1) The insolvency court shall determine by means of an order the insolvency administrator's remuneration and the expenses to be reimbursed to him.

(2) Such order shall be published and individually served on the administrator, the debtor and the members of the creditors committee if appointed. The determined amounts shall not be published; the public notification should point out that the complete order may be consulted in the registry.

(3) The administrator, the debtor and any creditor of the insolvency proceedings may bring an immediate appeal against the order. Section 567 subs. 2 of the Code of Civil Procedure shall apply accordingly.

Section 65: Empowerment to Issue an Order

The Federal Ministry of Justice shall be empowered to arrange the details of remunerations and refunding of the costs of the insolvency administrator by means of an ordinance.

Section 66: Rendering of Accounts

(1) Upon expiry of his office the insolvency administrator shall render account to an assembly of creditors.

(2) Prior to such assembly of creditors the insolvency court shall verify the administrator's rendering of accounts. The court shall lay out the administrator's final account with supporting documents, with a remark indicating verification of the account and with any comments of the creditors' committee if appointed to the parties' inspection; it may set a deadline for the creditors' committee to make a statement. The period between the laying out of such documents and the date of the creditors' assembly shall extend for at least one week.

(3) The creditors' assembly may charge the administrator with intermediate accounts to be rendered on certain dates during the proceedings. Subs. 1 and 2 shall apply mutatis mutandis.

Section 67: Establishment of the Creditors' Committee

(1) Prior to the first creditors' assembly the insolvency court may establish a creditors' committee.

(2) Such creditors' committee shall represent the creditors with a right to separate satisfaction, the creditors of the insolvency proceedings holding the maximum claims and the small sum creditors. The committee shall include a representative of the debtor's employees if the latter are involved as creditors of the insolvency proceedings holding considerable claims.

(3) Persons not holding the status of creditors may also be appointed as members of the creditors' committee.

Section 68: Election of Different Members

(1) The creditors' assembly shall decide on the establishment of a creditors' committee. If the insolvency court has already established a creditors' committee the creditors' assembly shall decide whether it is to be maintained in office.

(2) It may vote the dismissal of members designated by the insolvency court or the appointment of additional members to the creditors' committee.

Section 69: Duties Incumbent on the Creditors' Committee

The members of the creditors' committee shall support and monitor the insolvency administrator's execution of his office. They shall demand information on the progress of business affairs, have the books and business documents inspected and the monetary transactions and the available cash verified.

Section 70: Dismissal

The insolvency court may dismiss a member of the creditors' committee for an important reason. Such dismissal may be ordered ex officio or at the request of such member of the creditors' committee or of the creditors' assembly. The court shall hear such member of the creditors' committee prior to issuing such order; he may bring an immediate appeal against the decision.

Section 71: Liability of the Members of the Creditors' Committee

The members of the creditors' committee shall be held liable to damages for the creditors with a right to separate satisfaction and for the creditors of the insolvency proceedings if they wrongfully violate the duties incumbent on them under this statute. Section 62 shall apply mutatis mutandis.

Section 72: Decisions of the Creditors' Committee

A decision of the creditors' committee shall be valid if the majority of members attended the meeting voting on such decision and backed such decision with the majority of voting members.

Section 73: Remuneration of the Members of the Creditors' Committee

(1) The members of the creditors' committee shall be entitled to remuneration in consideration of execution of their offices and to reimbursement of their adequate expenses. The time and scope of execution of their office on the part of the members shall be taken into account.

(2) Section 63 subs. 2, as well as sections 64 and 65 shall apply mutatis mutandis.

Section 74: Convening the Creditors' Assembly

(1) The creditors' assembly shall be convened by the insolvency court. All creditors with a right to separate satisfaction, all creditors of the insolvency proceedings, the insolvency administrator, the members of the Creditors' Assembly and the debtor shall be entitled to attend such assembly.

(2) The time, place and agenda of the creditors' assembly shall be published. Such publication may be waived if a creditors' assembly adjourns its transactions.

Section 75: Request to Convene a Creditors' Assembly

(1) A creditors' assembly shall be convened if requested by

1. the insolvency administrator;

2. the creditors' committee;

3. at least five creditors with a right to separate satisfaction or non-lower-ranking creditors of the insolvency proceedings whose rights to separate satisfaction and claims together are assessed by the insolvency court to represent one fifth of the sum resulting from the value of all rights to separate satisfaction and of the claims of all non-lower-ranking creditors of the insolvency proceedings.

4. one or more creditors with a right to separate satisfaction or non-lower-ranking creditors of the insolvency proceedings whose rights to separate satisfaction and claims together are assessed by the insolvency court to represent two fifths of the sum mentioned at No. 3.

(2) The period between reception of such request and the date of the creditors' assembly shall extend no longer than three weeks.

(3) If the insolvency court refuses an order convening a creditors' assembly the requesting party may bring an immediate appeal.

Section 76: Decisions of the Creditors' Assembly

(1) The creditors' assembly shall be presided by the insolvency court.

(2) A decision of the creditors' assembly shall be valid if the sum of the claims held by backing creditors exceeds one half of the sum of claims held by the creditors with voting rights. For creditors with a right to separate satisfaction to whom the debtor is not personally liable, the claim shall be replaced by the value of such right.

Section 77: Determination of Voting Right

(1) A voting right shall be vested in claims filed by the creditor and not disputed by the insolvency administrator or by a creditor with a voting right. lower-ranking creditors shall have no voting rights.

(2) Creditors with disputed claims shall have a voting right to the extent to which the administrator and the attending creditors with a right to vote have agreed such vote during the creditors' assembly. If the parties 'cannot reach an agreement the decision of the insolvency court shall prevail. The insolvency court may modify its decision at the request of the administrator or of a creditor attending the creditors' assembly.

(3) Subs. 2 shall apply mutatis mutandis to

1. creditors holding claims subject to a condition precedent;

2. creditors with a right to separate satisfaction.

Section 78: Repeal of a Decision taken by the Creditors' Assembly

(1) If a decision taken by the creditors' assembly is against the common interest of the creditors of the insolvency proceedings, the insolvency court shall repeal such decision at the request of a creditor with a right to separate satisfaction, of a non-lower-ranking creditor of the insolvency proceedings or of the insolvency administrator if such request is brought during the creditors' assembly.

(2) Such repeal of a decision shall be published. Any creditor with a right to separate satisfaction and any non-lower-ranking creditor may bring an immediate appeal against a repeal. The requesting party may bring an immediate appeal against an order refusing such repeal.

Section 79: Information to the Creditors' Assembly

The creditors' assembly may require the insolvency administrator to give specific information and a report on the progress of the proceedings and on the management. If a creditors' committee has not been appointed the creditors' assembly may have the administrator's monetary transactions and the available cash verified.

Part Three: Effects of the Opening of Insolvency Proceedings

Chapter One: General Effects

Section 80: Right to Manage and Transfer the Assets Involved in the Insolvency Proceedings Vested in the Insolvency Administrator

(1) Upon the opening of the insolvency proceedings the debtor's right to manage and transfer the assets involved in the insolvency proceedings shall be vested in the insolvency administrator.

(2) An existing prohibition of transfers imposed on the debtor and purporting to protect only certain persons (section 135 and 136 of the Civil Code) shall have no binding effect on the proceedings. The provisions governing the effects of an attachment by way of execution shall remain unaffected.

Section 81: Transfers of Property by the Debtor

(1) If the debtor after the opening of the insolvency proceedings transfers an object forming part of the assets involved in the insolvency proceedings such transfer shall be legally invalid. Sections 892 and 893 of the Civil Code, 16 and 17 of the Act Governing Rights in Registered Ships and Ships under Construction (Gesetz über Rechte an eingetragenen Schiffen und Schiffsbauwerken) and 16 and 17 of the Act Governing Rights in Aircraft (Gesetz über Rechte an Luftfahrzeugen) shall remain unaffected. The consideration shall be restituted to the other party to the transfer from the assets involved in the insolvency proceedings if such assets received enrichment by it.

(2) With respect to an assignment of future claims to emoluments due to the debtor under a service contract or to recurring emoluments replacing them subs. 1 shall also apply to the extent to which such assignment covers any emoluments to be received by the debtor subsequent to termination of the insolvency proceedings. The debtor's right to assign such emoluments to a trustee for the purpose of collective satisfaction of the creditors of the insolvency proceedings shall remain unaffected.

(3) If the debtor transferred an object forming part of the assets involved in the insolvency proceedings on the day when the insolvency proceedings were opened such transfer shall be presumed to have been effected after the opening of the insolvency proceedings.

Section 82: Performance in Favour of the Debtor

If the debtor received performance to settle an obligation after the opening of the insolvency proceedings although such obligation had to be performed to the credit of the assets involved in the insolvency proceedings the performing party shall be discharged of his obligation if he was unaware of the opening of the proceedings at the time of his performance. If such party performed his obligation prior to publication of the order opening the proceedings he shall be presumed to have been unaware of the opening of the proceedings.

Section 83: Decedent's Estate. Continued Community

(1) If the debtor prior to the opening of the insolvency proceedings succeeded or during the insolvency proceedings succeeds to a decedent's estate or to a legacy only the debtor shall be entitled to accept or disclaim such estate or legacy. The same shall apply to the disclaimer of a continued community.

(2) If the debtor is a limited heir the insolvency administrator may not transfer any object forming part of the decedent's estate if such transfer would be invalid under section 2115 of the Civil Code with respect to the revisionary heir if the revisionary heir succeeds to the decedent's estate.

Section 84: Liquidation of a Company or a Community

(1) If a community, another ownership in common or a company without legal personality exists between the debtor and third parties, any distribution or other liquidation shall be effected outside the insolvency proceedings. The third parties may claim separate satisfaction from the debtor's share determined under such distribution or liquidation to settle any claims arising from the community, ownership in common or company without legal personality.

(2) An agreement excluding the right to liquidate a community for ever, for a limited period or for a period of notice to be given shall have no binding effect upon the insolvency proceedings. The same shall apply to a clause in the decedent's will with a similar content and binding on the community of heirs, and to a similar agreement among the members of a community of heirs.

Section 85: Joinder of Pending Actions as Plaintiff

(1) Actions affecting the property forming part of the assets involved in the insolvency proceedings and pending for the debtor as plaintiff on the date when the insolvency proceedings are opened may be joined by the insolvency administrator with their existing status. If such joinder is delayed section 239 subs. 2 to 4 of the Code of Civil Procedure shall apply mutatis mutandis.

(2) If the administrator refuses such joinder the debtor and the defendant may continue the action.

Section 86: Joinder of Certain Pending Actions as Defendant

(1) Actions pending against the debtor as defendant on the date when the insolvency proceedings are opened may be joined by the insolvency administrator or continued by the plaintiff if they cover:

1. the separation of an object from the assets involved in the insolvency proceedings;

2. separate satisfaction, or;

3. a debt incumbent on the assets involved in the insolvency proceedings.

(2) If the administrator acknowledges such claim immediately the plaintiff may claim reimbursement of the costs incurred for such action only as a creditor of the insolvency proceedings.

Section 87: Claims held by the Creditors of the Insolvency Proceedings

The creditors of the insolvency proceedings shall only be permitted to enforce their claims under the provisions governing the insolvency proceedings.

Section 88: Execution prior to the Opening of Insolvency Proceedings

If a creditor of the insolvency proceedings during the last month preceding the request to open the insolvency proceedings or after such request acquired by virtue of execution a security attaching the debtor's property forming part of the assets involved in the insolvency proceedings such security shall become legally invalid when the insolvency proceedings are opened.

Section 89: Prohibition of Execution

(1) Individual creditors of the insolvency proceedings may not execute into the assets involved in the insolvency proceedings or into the debtor's other property during the insolvency proceedings.

(2) Even creditors without the status of creditors of the insolvency proceedings may not execute during the proceedings into future claims to emoluments due to the debtor under a service contract or into recurring emoluments replacing them. This shall not apply to execution under a claim for maintenance or under a claim arising from wilful tort into the amount of emoluments not subject to attachment by other creditors.

(3) The insolvency court shall decide on any relief to be granted against execution under subs. 1 or 2. Prior to its decision the court may issue a restraining order; in particular, it may order a temporary suspension of such execution with or without providing a security and its continuation subject to a security.

Section 90: Prohibition of Execution under Debts incumbent on the Assets Involved in the Insolvency Proceeding

(1) Execution in respect of debts incumbent on the assets involved in the insolvency proceedings not caused by a transaction of the administrator shall be inadmissible for a period of six months from the opening of the insolvency proceedings.

(2) The following liabilities shall not be considered as such debts incumbent on the assets involved in the insolvency proceedings:

1. obligations under a mutual contract for whose performance the administrator opted;

2. obligations under a continuing obligation for the period after the first date when the administrator might have terminated such contract;

3. obligations under a continuing obligation insofar as the administrator receives its consideration for the assets involved in the insolvency proceedings.

Section 91: Exclusion of other Acquisition of Rights

(1) After the opening of the insolvency proceedings rights in objects forming part of the assets involved in the insolvency proceedings cannot be acquired with legal effect even if such acquisition of rights is not based on the debtor's transfer or effected by way of execution.

(2) Sections 878, 892 and 893 of the Civil Code, 3 subs. 3, 16 and 17 of the Act Governing Rights in Registered Ships and Ships Under Construction, 5 subs. 3, 16 and 17 of the Act Governing Rights in Aircraft and 20 subs. 3 of the Maritime Distribution Statute (Schiffahrtsrechtliche Verteilungsordnung) shall remain unaffected.

Section 92: General Damage

Rights held by the creditors of the insolvency proceedings for reimbursement of damage suffered jointly by such creditors due to a reduction of the property forming part of the assets involved in the insolvency proceedings before or after the opening of the insolvency proceedings (general damage) may be claimed only by the insolvency administrator during the insolvency proceedings. If such rights are sought against the administrator they may be claimed only by another, newly appointed insolvency administrator.

Section 93: Personal Liability of Partners

If insolvency proceedings have been opened for the assets owned by a company without legal personality or by a partnership limited by shares, only the insolvency administrator may claim a partner's personal liability to the company's debts during the insolvency proceedings.

Section 94: Preservation of the Right to Set Off a Claim

If by force of law or on the basis of an agreement a creditor of the insolvency proceedings had a right to set off a claim on the date when the insolvency proceedings were opened such right shall remain unaffected by the proceedings.

Section 95: Acquisition of the Right to Set Off a Claim During the Proceedings

(1) If on the date when the insolvency proceedings were opened one or more of the claims to be set off against each other were conditioned, were immature or did not cover similar types of performance such set-off may not be effected before its conditions are met. Sections 41 and 45 shall not apply. Set-off shall be excluded if the claim against which a set-off is to be effected will be unconditioned and mature before it may be set off.

(2) Set-off shall not be excluded by the claims being expressed in different currencies or mathematical units if these currencies or mathematical units are freely exchangeable at the place of payment of the claim against which a set-off is to be effected. They shall be converted according to the exchange value applicable to this place at the time of receipt of the declaration of set-off.

Section 96: Prohibition of Set-Off

(1) Set-off shall be prohibited if

1. a creditor of the insolvency proceedings has become an obligor to the credit of the assets involved in the insolvency proceedings only after the opening of the insolvency proceedings;

2. a creditor of the insolvency proceedings acquired his claim from another creditor only after the opening of the insolvency proceedings;

3. a creditor of the insolvency proceedings acquired the opportunity to set off his claim by a transaction subject to contest;

4. a creditor with a claim to be satisfied from the debtor's free property is an obligor to the credit of the assets involved in the insolvency proceedings.

(2) Subs. 1 as well as section 95 subs. 1 third sentence shall not oppose the set-off of claims and benefits from transfer, payment or assignment agreements introduced into a system serving to implement such agreements where set-off is effected at the latest on the day of opening of the insolvency proceedings. A system within the meaning of the first sentence shall be a written agreement in accordance with Article 2 (a) of Directive 98/26/EC of the European Parliament and of the Council of 19 May 1998 on settlement finality in payment and securities settlement systems (OJ EC No. L 166 p. 45) reported to the Commission of the European Communities by the Deutsche Bundesbank or the competent authority of another member state or contracting party of the Agreement on the European Economic Area. Systems from third states shall be deemed equivalent to the systems named in the second sentence where they largely meet the preconditions stipulated in Article 2 (a) of Directive 98/26/EC.

Section 97: The Debtor's Obligation to Disclosure and Cooperation

(1) The debtor shall disclose any circumstances relating to the insolvency proceedings to the insolvency court, the insolvency administrator, the creditors' committee and, if so ordered by the insolvency court, to the creditors' assembly. He shall also disclose any facts able to bring about his criminal prosecution for commission of a criminal or administrative offence. However, any fact disclosed by the debtor under his obligation in accordance with the first sentence may not be used against the debtor without his consent in trial or proceedings under the Administrative Offences Act (Gesetz über Ordnungswidrigkeiten) brought against the debtor or a relation mentioned at section 52 subs. 1 of the Code of Criminal Procedure.

(2) The debtor shall support the administrator in the latter's execution of his duties.

(3) Under an order issued by the court the debtor shall be obligated to be available at any time to meet his obligations to disclosure and cooperation. He shall forbear any activity contradicting the execution of such duties.

Section 98: Imposition of the Duties of the Debtor

(1) If necessary to provide truthful statements the insolvency court shall order the debtor's affidavit for the records that he disclosed any demanded facts truly, correctly and completely. Sections 478 to 480 and 483 of the Code of Civil Procedure shall apply mutatis mutandis.

(2) The court may sub poena the debtor and detain him after hearing him

1. if the debtor refuses to give information or to provide an assurance under oath or to support the fulfilment of the duties of the insolvency administrator,

2. if the debtor attempts to evade the execution of his obligations to disclosure and cooperation, in particular by preparing his flight, or

3. if such subpoena and detainment are necessary to avoid the debtor's activities contradicting the execution of his obligations to disclosure and cooperation, in particular to secure the assets involved in the insolvency proceedings.

(3) Sections 904 to 910 and 913 of the Code of Civil Procedure shall apply mutatis mutandis in respect of the ordering of detention. The order imposing detention shall be rescinded ex officio as soon as the preconditions for the ordering of detention no longer exist. Immediate appeal shall be available against the ordering of detention, as well as against refusal of an application for rescission of the order imposing detention if its conditions no longer exist.

Section 99: Interception of the Debtor's Mail

(1) If such measure seems necessary in order to investigate or prevent the debtor's transactions disadvantaging the creditors the insolvency court at the insolvency administrator's request or ex officio shall, by order and giving grounds, order redirection to the administrator of certain or all mail consignments destined for the debtor. Such order shall be issued after the debtor is heard unless this would endanger the purpose of the order due to the particular circumstances of the case. If the debtor is not previously heard, grounds for this must be given in the order and the hearing carried out immediately afterwards.

(2) The administrator shall be entitled to open any mail consignment redirected to him. Mail consignments with a content unrelated to the assets involved in the insolvency proceedings shall be forwarded to the debtor immediately. Any other mail consignments may be inspected by the debtor.

(3) The debtor may bring an immediate appeal against the ordering of interception of his mail. After hearing the administrator the insolvency court shall repeal such order if its conditions have ceased to exist.

Section 100: Maintenance Payments using the Assets Involved in the Insolvency Proceedings

(1) The creditors' assembly shall determine whether and to what extent the debtor and his family are to be granted maintenance using the assets involved in the insolvency proceedings.

(2) Until the creditors' assembly reaches a decision, with the agreement of the creditors' committee if appointed, the insolvency administrator may grant necessary maintenance to the debtor. In the same way it shall be possible to grant maintenance to the debtor's minor unmarried children, spouse, former spouse and the other parent of his child regarding a claim under sections 1615 1 and 1615 n of the Civil Code.

Section 101: Members of the Body Representing the Debtor. Employees

(1) If the debtor is not an individual, sections 97 to 99 shall apply mutatis mutandis to the members of the body representing or supervising the debtor, as well as to his general partners who are entitled to represent him. In addition; sections 97 subs. 1 and 98 shall apply mutatis mutandis to persons who left a position mentioned in the first sentence no earlier than two years before the opening of the insolvency proceedings was requested. Section 100 shall apply mutatis mutandis to the general partners of the debtor who are entitled to represent him.

(2) Section 97 subs. 1 first sentence shall apply mutatis mutandis to the debtor's employees and previous employees, insofar as these did not leave earlier than two years prior to the opening of the insolvency proceedings was requested.

Section 102: Restriction of a Basic Right

Section 21 subs. 2 No. 4, as well as sections 99 and 101 subs. 1 first sentence shall authorize a limitation of the basic right of privacy (letters, telecommunications) (Article 10 of the Basic Law).

Chapter Two: Performance of Transactions. Cooperation of the Works Council

Section 103: Option to be Exercised by the Insolvency Administrator

(1) If a mutual contract was not (or not completely) performed by the debtor and its other party at the date when the insolvency proceedings were opened the insolvency administrator may perform such contract replacing the debtor and claim the other party's consideration.

(2) If the administrator refuses to perform such contract the other party shall be entitled to its claims for non-performance only as a creditor of the insolvency proceedings. If the other party requires the administrator to opt for performance or non-performance the administrator shall state his intention to claim performance without negligent delay. If the administrator does not give his statement he may no longer insist on performance.

Section 104: Fixed-date Transactions Financial Futures

(1) If the delivery of goods with a market or stock exchange price was agreed to take place exactly on a definitely fixed date or within a definitely fixed period, and if such date or expiry of the period occurs after the insolvency proceedings were opened performance may not be claimed, but only claims for non-performance.

(2) If financial performance with a market or stock exchange price was agreed to take place at a fixed date or within a fixed period, and if such date or expiry of the period occurs after the insolvency proceedings were opened performance may not be claimed, but only claims for non-performance. In particular the following shall be regarded as financial performance

1. the delivery of precious metals,

2. the delivery of securities or comparable rights if it is not intended to obtain a participation in a company in order to establish a long-term association,

3. performances in specie which have to be effected in foreign currency or in a mathematical unit,

4. performances in specie the amount of which is indirectly or directly determined by the exchange rate of a foreign currency or mathematical unit, by the interest rate prevailing for claims or by the price of other goods or services,

5. options and other rights to deliveries or performances in specie in the meaning of Nos. 1 to 4.

If transactions on financial performances are combined in a framework contract for which agreement has been reached that in the case of violations of the contract it may only be terminated uniformly, the totality of these transactions shall be regarded as a mutual contract in the meaning of sections 103 and 104.

(3) Such claim for non-performance shall cover the balance between the agreed price and the market or stock exchange price prevailing at the place of performance on the second workday after the insolvency proceedings were opened for a contract with the agreed period of performance. The other party may bring such claim only as a creditor of the insolvency proceedings.

Section 105: Severable Contracts

If the contractual performances due to the parties are severable, and if the other party already had performed part of the services incumbent on it on the date when the insolvency proceedings were opened such other party shall be deemed a creditor of the insolvency proceedings for the amount of its claim to consideration corresponding to the part of the services already performed by it, even if the insolvency administrator claims performance of the services not yet performed. The other party shall not be entitled to claim restitution for non-performance of its claim to the consideration of the part of services transferred to the debtor's assets before the insolvency proceedings were opened.

Section 106: Priority Notice

(1) If a priority notice was entered into the Land Register in order to secure a claim to grant or terminate a right in the debtor's real estate or in a right registered for the debtor, or in order to secure a claim to modify the contents or priority of such right the creditor may claim satisfaction of his claim from the assets involved in the insolvency proceedings. The same shall apply if the debtor undertook additional obligations with respect to the creditor and 'such obligations have not been met or have not been completely met.

(2) Subs. 1 shall apply mutatis mutandis to a priority notice entered into the register of ships and the register of ships under construction, or into the register of liens on aircraft.

Section 107: Retention of Title

(1) If the debtor, before the insolvency proceedings were opened, has sold a movable article while retaining title and transferring its possession to the purchaser the purchaser may claim performance of the sales contract. The same shall apply if the debtor has undertaken additional obligations with respect to the purchase and such obligations have not been met or have not been completely met.

(2) If the debtor, before the insolvency proceedings were opened, has purchased a movable article in which the has seller retained title and whose possession was transferred to the debtor by the seller, the insolvency administrator, required by the seller to opt for performance or non-performance, need not submit his declaration pursuant to section 103 subs. 2 until without negligent delay after the report meeting. This shall not apply if in the period preceding the report meeting a considerable reduction is to be expected in the value of the movable article and the creditor has notified the administrator of this circumstance.

Section 108: Continuity of Continuing Obligations

(1) Contracts concluded by the debtor for the lease and tenancy of immovables or premises and for services to be performed for the debtor shall continue to exist, but to the credit of the assets involved in the insolvency proceedings. This shall also apply in respect of rental and lease contracts concluded by the debtor as landlord or lessor relating to other effects assigned as a security to a third party who had financed their acquisition or production.

(2) Claims arising before the insolvency proceedings were opened may be brought by the other party only as a creditor of the insolvency proceedings.

Section 109: Debtor's Status as Tenant or Lessee

(1) A contract for the tenancy or lease of immovables or premises concluded by the debtor as tenant or lessee may be terminated by the insolvency administrator with the legal period of notice irrespective of any agreed period of notice. If the dwelling of the debtor is the subject-matter of the lease agreement, termination shall be replaced by the right of the insolvency administrator to declare that claims becoming due on expiry of the period specified in the first sentence may not be asserted in the insolvency proceedings. If the administrator terminates under the first sentence, or if he submits the declaration in accordance with the second sentence, the other party may claim damages as a creditor of the insolvency proceedings for premature termination of such contract or in respect of the consequences of the declaration.

(2) If the debtor had not yet entered into possession of the immovables or premises when the insolvency proceedings were opened the administrator and the other party may withdraw from such contract. If the administrator withdraws from the contract the other party may claim damages as a creditor of the insolvency proceedings for premature termination of the contract. At the other party's request each party shall state within two weeks whether it intends to withdraw from the contract; if any of the parties does not give their statement they shall lose the right to withdraw.

Section 110: Debtor's Status as Landlord or Lessor

(1) If the debtor as landlord or lessor of immovables or premises assigned his future claim to tenancy or lease fees to a third party before the insolvency proceedings were opened the validity of such assignment shall be limited to tenancy or lease fees to be received for the current month of the opening of the insolvency proceedings. If the insolvency proceedings were opened after the fifteenth day of a month the validity of such assignment shall also be valid in respect of the following month.

(2) In particular, collection of the tenancy or lease fees shall be deemed an assignment for the purpose of subs. 1. An assignment under contract shall be deemed equivalent to a transfer effected by way of execution.

(3) The tenant or lessee may set off any claim entitling him against the debtor against the claim to tenancy or lease fees covering the period mentioned at subs. 1. Sections 95 and 96 Nos. 2 to 4 shall remain unaffected.

Section 111: Sale of Property Let by the Debtor

If the insolvency administrator sells immovables or premises let by the debtor, and if the purchaser replaces the debtor as a party of the tenancy or lease, the purchaser may terminate the tenancy or lease with the legal period of notice. Such notice may be given only for the first date of the legal period of notice. Section 57c of the Act on Forced Sale and Sequestration (Gesetz über die Zwangsversteigerung und die Zwangsverwaltung) shall apply mutatis mutandis.

Section 112: Prohibition to Terminate Tenancy or Lease Contracts

Tenancy or lease contracts concluded by the debtor as tenant or lessee may not be terminated by the other party after the opening of the insolvency proceedings was requested:

1. because of default in the payment of tenancy or lease fees arising before the opening of the insolvency proceedings was requested,

2. because of degradation of the debtor's financial situation.

Section 113: Termination of a Service Contract

(1) A contract entitling the debtor to services may be terminated by the insolvency administrator and by the other party irrespective of any agreed duration of such contract or agreed exclusion of the right to routine termination. If no shorter period has been agreed, the period of notice shall be three months to month's end. If the administrator terminates such contract the other party may claim damages as a creditor of the insolvency proceedings for premature termination of the service contract.

(2) If an employee intends to invoke the invalidity of the insolvency administrator's termination of his contract he shall even bring an action with the Labour Court within three weeks of his reception of such termination if he invokes the invalidity of such termination for other reasons than those given at section 1 subs. 2 and 3 of the Dismissals Protection Act (Kündigungsschutzgesetz). Section 4 fourth sentence and section 5 of the Dismissals Protection Act shall apply mutatis mutandis.

Section 114: Emoluments from a Service Contract

(1) If the debtor prior to the opening of the insolvency proceedings assigned or pledged a future claim to emoluments due to him under a service contract or to recurring emoluments replacing them, the validity of such assignment or pledge shall be limited to the emoluments to be received by the debtor prior to the end of two years following the end of the current calendar month on the date of the opening of the proceedings.

(2) Against the claim to emoluments covering the period mentioned at subs. 1 the obligated person may set off any claim entitling; him against the debtor. Sections 95 and 96 Nos. 2 to 4 shall remain unaffected.

(3) If future emoluments were transferred prior to the opening of the insolvency proceedings by way of execution, the validity of such transfer shall be limited to emoluments to be received by the debtor for the current calendar month on the date of the opening of the proceedings. If the insolvency proceedings were opened after the fifteenth day of the month, the validity of such transfer shall extend to the subsequent calendar month. Section 88 shall remain unaffected; Section 89 subs. 2 second sentence shall apply mutatis mutandis.

Section 115: Expiry of Mandates

(1) Any mandate ordered by the debtor referring to the property forming part of the assets involved in the insolvency proceedings shall expire upon the opening of the insolvency proceedings.

(2) If suspension of such mandate would cause a risk the mandatory shall continue to perform the mandated transaction until the insolvency administrator is able to otherwise take care of such transaction himself. For this purpose the mandate shall be deemed to continue. The mandatory may claim reimbursement of his expenses incurred for such continuation as a creditor of the assets involved in the insolvency proceedings.

(3) As long as the mandatory is not at fault in being unaware of the opening of insolvency proceedings he shall benefit from the presumption that the mandate continues. The mandatory shall rank among the creditors of the insolvency proceedings with his reimbursement claims arising from such continuation.

Section 116: Expiry of Management Contracts

If anyone is obligated under a service or work contract with the debtor to manage a business transaction for the latter, section 115 shall apply mutatis mutandis. The provision governing reimbursement claims arising from a continuation of such management contract shall also apply to claims to remuneration.

Section 117: Expiry of Proxies

(1) A proxy granted by the debtor with respect to the property forming part of the assets involved in the insolvency proceedings shall expire upon the opening of the insolvency proceedings.

(2) As far as a mandate or a management contract is deemed to continue under section 115 subs. 2 the related authority shall also be deemed to continue.

(3) As long as the authorised person is not at fault in being unaware of the opening of insolvency proceedings he shall not be held liable under section 179 of the Civil Code.

Section 118: Liquidation of Companies

If a company without legal personality or a partnership limited by shares is liquidated by the opening of insolvency proceedings for the property owned by one partner the managing partner shall rank among the creditors of the assets involved in the insolvency proceedings with his claims arising from the provisional continuation of urgent business transactions. As long as the managing partner is not at fault in being unaware of the opening of insolvency proceedings he shall rank among the creditors of the insolvency proceedings with his claims arising from the continuation of business transactions. Section 84 subs. 1 shall remain unaffected.

Section 119: Invalidity of Agreements Derogating from the Foregoing Provisions

Agreements excluding or limiting the application of sections 103 to 118 in advance shall be invalid.

Section 120: Termination of Plant Agreements

(1) If a plant agreement provides for benefits incumbent on the assets involved in the insolvency proceedings the insolvency administrator shall consult the works council about agreement on a reduction of such benefits. Such plant agreement may be terminated by giving three months' notice even if a longer period of notice has been agreed.

(2) The right to terminate a plant agreement for an important reason without a period of notice shall remain unaffected.

Section 121: Plant Modifications and Conciliatory Proceeding

In insolvency proceedings opened for the property owned by the entrepreneur, section 112 subs. 2 first sentence of the Industrial Constitution Act (Betriebsverfassungsgesetz) shall 1 apply with the proviso that the conciliatory proceedings shall only be preceded by an attempt on the part of the president of the Land Employment Office to settle the matter if both the insolvency administrator and the works council request such an attempt.

Section 122: Judicial Approval of a Plant Modification

(1) If a plant modification is envisaged, and if the insolvency administrator and the works council cannot reach an agreement pursuant to section 112 of the Industrial Constitution Act on reconciliation of interests within three weeks from the beginning of negotiations or written request to begin negotiations although the administrator has provided comprehensive information in good time to the works council, the administrator may request a decision on the part of the Labour Court approving such plant modification without prior proceedings under section 112 subs. 2 of the Industrial Constitution Act. Section 113 subs. 3 of the Industrial Constitution Act shall not be applied in this respect. The administrator's right to bring about a reconciliation of interests pursuant to section 125 or to file a request for a court decision pursuant to section 126 shall remain unaffected.

(2) The Court shall approve such plant modification if the economic condition of the enterprise, also taking into account the social concerns of the employees, warrants the execution of such plant modification, without previous proceedings in accordance with section 112 subs. 2 of the Industrial Constitution Act. The provisions contained in the Labour Court Act (Arbeitsgerichtsgesetz) on decisions by order shall apply mutatis mutandis; the insolvency administrator and the works council shall be the parties involved in the proceedings. Pursuant to section 61 a subs. 3 to 6 of the Labour Court Act, the application is to be dealt with as a matter of priority.