Germany amends insolvency rules following Lehman “netting” decision

The German parliament has passed an amendment to its insolvency code, providing clarity on the status of “netting” arrangements in financial transactions. Ivo-Meinert Willrodt told GRR that while the amendment is welcome there is some trepidation as the clause apparently, but not explicitly, gives the banking sector an exemption from general bankruptcy law. “It was agreed that the banking sector needed legal certainty on this issue and that this particularly adds clarity for banks assessing their capital assets, which helps them to abide by international standards on capital assets,” said Willrodt. He added, however, that some experts are worried that there is an ambiguity in the article that means those in other industries might try to use the exception to amend contracts similarly.