World Surveillance Group Inc (fka WSGI)

[Squirt]

trunkmonk

I found the following excerpt on page 5 of this link:

http://findarticles.com/p/articles/mi_m4130/is_n3_v25/ai_19161963/pg_1

"C. The German Code

Current German bankruptcy law consists of two codes: Konkursordnung, or compulsory liquidation, and Vergleichsordnung, or composition proceedings. In July 1994, new bankruptcy legislation was passed. The new code is scheduled to come into force in 1999.

Currently, the most commonly used procedure is compulsory liquidation. In compulsory liquidation, control of the assets of the firm is transferred from management to the konkursverwalter (insolvency administrator), an insolvency practitioner typically appointed by the court. A creditors' committee supervises the insolvency administrator.

Although the administrator's directive is to sell the firm for cash, there is no rush to sell off the firm's assets. There is, in effect, an unlimited stay against unsecured creditors, and the administrator can raise new senior financing. Thus the administrator can keep a firm alive if he deems economic conditions to be unfavorable for a sale, for example, there may not be liquid markets for some assets such as office buildings or manufacturing plants. That the administrator has great powers to take his time in selling the insolvent firm is illustrated by the average duration of the typical konkursverfahren. According to Gessner et al. (1978) in a study commissioned by the German Federal Ministry of Justice, the average time spent in compulsory liquidation is 27.5 months.

The composition proceeding is a relatively recent addition to the statutes and is an alternative to compulsory liquidation. However, it is seldom used; in 1992, only 0.3% of all insolvencies were composition proceedings while 25% of insolvencies entered into compulsory liquidation. Composition proceedings were more common in the past. In 1960, they amounted to 16% of all insolvencies, while in 1974 they amounted to only 7% (Landfermann, 1994)."

The description of a "composition proceeding" and the administrator's duties are on page 6. The entire article is interesting.


Check out this link: http://w3.univ-tlse1.fr/iae/files/7_pdf.pdf

The table on pages 3 and 4 gives you a decent comparative overview of a number of countries.


I have a better idea of how Germany's system works. I also now know it favors the creditor as opposed to the US Code which favors the company.