CERIL Statement 2017-1 on Transactions Avoidance Laws

National insolvency laws in Europe typically contain rules on avoidance actions. Some of them are designed to provide sanctions against fraudulent behaviour or transactions at an undervalue, whereas others aim to enforce the principle of equal treatment of creditors by enabling the insolvency practitioner to challenge preferential treatment given to a creditor in a given period prior to the application for, or opening of, insolvency proceedings. The project aims at collecting information on transactions avoidance rules from various jurisdictions and examine them regarding their underlying policies and principles.

Click here to go to Projects to read more about the project on Transactions Avoidance laws and the Report on Transactions Avoidance laws (CERIL Report 2017-1).

Permitting transactions avoidance means, in many cases, disappointing the expectations of the defendants that they may keep what they have received, even where the debtor turns out to be insolvent. Hence, the principle of protection of trust comes into play. Various ways of protecting legitimate expectations are incorporated into transactions avoidance laws. Some rules require subjective elements (e. g. knowledge of the creditor that the debtor was insolvent when the claim was satisfied). Others protect creditors who have taken performance rather than received it from the debtor (e. g. satisfaction of a claim in individual enforcement proceedings is challengeable under German insolvency law but not under English insolvency law). On the other hand, in many jurisdictions transactions at an undervalue are challengeable without any protection of trust (based on the conviction that he who has received a performance without any consideration is not worthy of protection). The task of the project will be to collect information on the various methods of protecting the legitimate expectations of creditors in transactions avoidance laws.

There may be other principles involved in this subject, such as the principle of predictability. However, we suggest concentrating on the two main principles and enquiring after their relevance in national transactions avoidance laws.

Click here for the Report on Transactions Avoidance laws: "Clash of Principles: Equal Treatment of Creditors vs. Protection of Trust" (CERIL Report 2017-1).

For further information, please contact:

Prof. Reinhard Bork, Geschäftsführender Direktor des Seminars für Zivilprozess- und Allgemeines Prozessrecht der Universität Hamburg, Rothenbaumchaussee 33, 20148 Hamburg, Germany (ph +49-40-42838-4110, fax +49-40-42838-5528, email: bork@uni-hamburg.de, http://www.jura.uni-hamburg.de/personen/bork.