preference

Which translation, when

Why

English preference is one specific avoidance head, and German Insolvenzanfechtung is a single broader power with several heads and much longer reach. Under §§ 129 ff. InsO the Insolvenzverwalter may unwind a Rechtshandlung that disadvantaged the general body of creditors before the proceedings opened, and the recipient must return the value to the Masse, § 143 InsO. The English preference, a step that put a creditor in a better position and was influenced by a desire to prefer, s.239 Insolvency Act 1986, corresponds most closely to the Deckungsanfechtung, § 130 InsO where the creditor was entitled to the security or payment and knew of the Zahlungsunfähigkeit, § 131 InsO where he was not so entitled, which is easier to challenge and broader in what it can catch, though it runs on the same three-month clock. But German law does not stop there, § 133 InsO allows a Vorsatzanfechtung of any transfer the debtor made to disadvantage creditors and the other side knew of, four years back for a security or satisfaction and ten for other transfers, and § 134 InsO reaches gratuitous transfers of the last four years. So the German clocks run in years where the English ones run in months, the test turns on the creditor’s knowledge rather than the debtor’s desire, and translating preference flatly as Insolvenzanfechtung understates how much more the German office-holder can pull back.

Typical mistakes

• Insolvenzanfechtung is wider than the English preference, §§ 129 ff. InsO, covering security, satisfaction, gratuitous transfers and intent-based transfers alike, so equating it with the single preference head understates the Verwalter’s reach.
• The clocks run in years, not months, § 133 InsO reaching back four years for a security and ten for other transfers, § 134 InsO four years for gratuitous transfers, against the English six-month preference window.
• The German test turns on the creditor’s knowledge of Zahlungsunfähigkeit or of the debtor’s intent, § 130 and § 133 InsO, not on the debtor’s desire to prefer that English law requires, so advice built on the English desire test misreads what must be proven.

What matters

Distressed-debt and clawback questions meet a wider power on a longer clock: Insolvenzanfechtung under §§ 129 ff. InsO reaches securities and payments three months back, § 130 and § 131, and intent-based transfers four to ten years back, § 133. The advice assuming a six-month preference window has understated the exposure, the German Verwalter reaching years further and testing the creditor’s knowledge rather than the debtor’s desire.

Examples