Agreements on instalments are common practice in the day-to-day business transactions in Germany if the business partner informs that he cannot pay an invoice by the agreed maturity date.

Since the decision of the German Federal Supreme Court of 6 December 2012 (referred to as the “St. Nicholas judgment”), insolvency administrators take a request for payment in instalments of the later insolvency debtor as a cause to reclaim any payments made in this regard (and from other subsequent transactions) in the context of a legal challenge under insolvency law. In the aforementioned judgment, the Federal Supreme Court assumed that the later debtor revealed his insolvency by the request for instalments and that the opponent party had to recognize this merely on the basis of the request for instalments. Now the Federal Supreme Court has defused this stance in a current decision.

Facts of the Case
The Federal Supreme Court now had to decide on a non-admission complaint brought by an insolvency administrator. The later insolvency debtor had asked the opponent of the appeal for payment in instalments and the defendant granted this request. In this agreement, a three-day acceleration clause had been agreed. The later insolvency debtor had paid various instalments with slight delay so that the acceleration clause would actually have intervened. However, the defendant did not make use of it, and the payment in instalments was made in full in the end. The Higher Regional Court Cologne as the instance of appeal had already rejected the appeal of the insolvency administrator by a decision with the reasoning that merely the request for instalments does not have as a consequence that a contract partner has to assume a cessation of payment if no other indications are given. The triggering of the acceleration clause by exceeding the payment deadlines would be harmless here since the exceedance was only insubstantial and the defendant did not make use of the acceleration clause. 

The Federal Supreme Court followed this argumentation. Fortunately, it expressly found that merely the request for payment in instalments is even in line with customary business practices and does not have to indicate a cessation of payments.

Information for the practice
With the present judgment, the Federal Supreme Court has significantly defused the jurisdiction regarding the legal challenge of payments in instalments (probably in anticipation of the planned legislative change). However, caution needs to be exercised; the case that was decided here can only be generalized for those circumstances where the request for payment in instalments is the only indication for a cessation of payments. As soon as there are additional indications, the risk of a legal challenge multiplies and results in unpredictable risks, at least if this concerns an ongoing business relationship.

(BGH, judgment of 16 April 2015 − IX ZR 6/14)

Ansgar Hain, Attorney and Insolvency Administrator (Berlin)