With the exception of Section 116 of the InsO, commercial contracts generally do not automatically stop at the start of the insolvency proceedings. However, in commercial contracts such as supply contracts, framework contracts or OEM agreements, the parties jointly agree on insolvency termination rights that haunt the party to declare an exceptional termination if the other party becomes insolvent. It should be noted that the Bundesgerichtshof has decided that termination clauses related to insolvency are inoperative in long-term contracts, insofar as they oppose the judicial administrator`s assessment of pursuing a contract under Sections 103 and following in the InsO. More recently, German courts have tended to be very strict with regard to such termination clauses and also tend to declare termination clauses that have an “insolvency connection” ineffective. Gibson Dunn`s lawyers are available to answer questions about the questions covered in this update. Gibson Dunn`s two German offices in Munich and Frankfurt bring together lawyers with extensive knowledge in the areas of business, finance and restructuring, taxes, labour, real estate, cartels, intellectual property, as well as high-level compliance/business crime and judicial experience. The German offices are composed of experienced lawyers with extensive experience, who have supported clients in different sectors and jurisdictions around the world. Our German lawyers work closely with the firm`s practice groups in other jurisdictions to provide current legal advice and advice on the most complex transactions and legal issues. For more information, contact Gibson Dunn`s lawyer, with whom you work, or one of the following members of the German offices: In addition to the changes to the termination date of the transactions and the setting of the final amount described above, The Legislator took the opportunity to clarify the types of transactions to which the new clause 104 of the bankruptcy code applies.
The new rules are also extremely important for the energy trade. However, Parliament did not explicitly mention energy trade in the new Section 104, although the federal government felt in the rationales for the reform law that the new rules would also apply to energy trade. This is consistent with the widely held view of market participants. Nevertheless, an explicit provision would have been preferable. Germany now has nearly 5,000 confirmed cases of coronavirus and 12 deaths.  In our customer update of 14 April 2020, in English and German at the following address: www.gibsondunn.com/corporate-ma-in-times-of-the-corona-crisis-current-legal-developments-for-german-business/, we have already discussed various reactions from the German and European legislators and the administration, which are relevant to corporate law and transactions in Germany.