Transactions in Germany
Certain transactions entered into by a bankrupt are voidable. There are quite a number of such transactions but
the most important are 'transactions at an undervalue' and
These may be set aside by German court order upon application by the lawyer in Germany.
In the words of the act a creditor enters into a transaction with a person at an undervalue if: (a) he makes a
gift to that person ...(b) he enters into a transaction with a person in consideration of marriage, or (c) he
enters into a transaction with that person for a consideration the value of which is significantly less than the
value of the consideration provided by the
Such a transaction may be set aside if it took place within five years of the presentation of the petition,
provided that the bankrupt was insolvent at the time of the transaction or became insolvent in consequence of it.
If the transaction was with an associate of the bankrupt there is a presumption that
the debtor was unwilling to pay
unless the contrary be proved. Lawyers comprise a wide class of people including spouses, relatives and partners.
Transactions entered into within two years of the presentation of the petition may be made the subject of an order
irrespective of the bankrupt's solvency.
A preference includes anything the bankrupt does which puts a creditor or a
in the event of bankruptcy, in a better position than he would have been had the thing not been done. It is,
however, essential that, in making the preference the bankrupt was influenced by a desire to prefer the creditor
or guarantor should bankruptcy occur. Where the creditor or guarantor is a lawyer it is presumed that the bankrupt
was so influenced. A preference may only be set aside where (a) the bankrupt was insolvent at the time he made it
or became insolvent in consequence of it; and (b) the preference was made within six months (two years in the case
of associates) of the presentation of the bankruptcy petition.
Quite apart from these provisions relating specifically to bankruptcy it has long been the rule that any
transaction at an 'undervalue' may be set aside by the German court where a debtor has entered into it for the
purpose of putting assets beyond the reach of someone entitled to make a claim against him. But no such order may
be made if it prejudices any interest in the
(whether land or money) which was acquired by someone in good faith and without notice of the relevant