The Association of Insolvency Administrators and Trustees in Germany (VID) has submitted a detailed statement on the ministerial draft bill issued by the Federal Ministry of Justice and Consumer Protection (BMJV). The ministry intends to place the professional law governing insolvency office holders on an independent statutory footing. The association considers this step fundamentally positive, as key principles such as nationwide admission, a central register and the establishment of a dedicated professional chamber have been advocated since the association's own benchmark paper in 2009.
At the same time, the professional association warns that the present draft exceeds what is necessary on crucial points. This concerns in particular the planned oversight, the envisaged data collection and the severity of sanctions. The VID advocates capping fines at 500,000 EUR rather than adopting the ministry's proposed framework of up to five million EUR. In addition, coercive fines and financial penalties should not be recorded in the register, and limitation and expungement periods should be shortened.
Chamber structure, supervision and register management
With regard to organisation, the VID advocates functional self-governance. The future nationwide chamber should operate with a general assembly of all members and concentrate primarily on professional admission, the revocation of admission, as well as initial and ongoing training. The association rejects the establishment of a proceedings-related register within the chamber to prevent the creation of a centralised data clearing house for all insolvency proceedings. Instead of extensive ministerial statutory order powers, the association calls for the strengthening of bylaw autonomy.
Regarding professional supervision, the organisation opposes dual structures. While cross-proceeding oversight by the chamber should close a gap between court districts, supervision over ongoing proceedings must remain exclusively with the competent insolvency courts. A general right of complaint for everyone is rejected. The VID views positively the plan to replace the more than 190 inconsistent court pre-selection lists with a digital, transparent federal register.
Integration of debtor-in-possession proceedings and quality standards
A major point of criticism remains the omission of debtor-in-possession proceedings. Because large and economically significant restructurings in particular are conducted under debtor-in-possession status, the VID calls for an appropriate anchoring in professional law. This type of proceeding should in future only be permitted if an admitted professional acts as an executive organ or general commercial representative for the debtor, for instance as Chief Restructuring Officer. Furthermore, the association demands the incorporation of the established principles of proper insolvency administration (GOI) into the professional regulations.
- —Limit statutory requirements to the necessary minimum and strengthen professional self-governance
- —Consistently avoid creating dual controls in ongoing insolvency proceedings
- —Maintain high quality standards without creating additional administrative burdens
- —Establish nationwide admission criteria and protect the independence of liberal professions
Dr Christoph Niering, Chairman of the professional association, underlines that a modern professional law must guarantee high standards of professional practice without burdening day-to-day operations with excessive bureaucracy. Alongside fair access for younger professionals entering the field, the association calls for reliable grandfathering provisions for established consumer insolvency administrators and a clear statutory definition of a protected liberal profession.
