CJEU guidance on detrimental acts—Lutz v Bäuerle

CJEU guidance on detrimental acts—Lutz v Bäuerle

What does the recent CJEU case of Lutz v Bäuerle tell us about when the art 13 defence (where the beneficiary proves that the act is subject to another law which doesn't allow a challenge) can be used in practice and whether it applies to procedural provisions such as time-bars?

Original news

Lutz v Bäuerle: C-557/13

This case involved a reference to the Court of Justice of the European Union (CJEU) for a preliminary ruling under Regulation (EC) 1346/2000, arts 4 and 13 (the EC Regulation on Insolvency). Payment was made after the date on which insolvency proceedings were opened on the basis of an attachment carried out before that date. The German liquidator brought an action to set aside an act detrimental to the interests of the creditors. The recipient argued that limitation periods or other time-bars applied to the action to set the transactions aside.

How did the issue arise and what were the jurisdictional factors?

Mr Lutz (an Austrian individual) purchased a car from the Austrian subsidiary of a German car seller. He never received the car and therefore claimed in the Austrian courts for an attachment of certain of the debtor company's bank accounts in Austria. The Austrian bank paid out the monies to Mr Lutz and that payment was later challenged by the German liquidator of the company. The relevant timeline is as follows:

  • 17 Mar 2008-Austrian court issues an enforceable payment order in favour of Mr Lutz against the debtor company
  • 18 April 2008-debtor files application for German insolvency proceedings
  • 20 May 2008-attachment of three Austrian bank accounts of the company
  • 4 August 2008-German insolvency proceedings opened (as main proceedings) in respect of the company
  • 17 Mar 2009-Austrian bank pays monies to Mr Lutz

Under German law, any enforcement of security over the debtor's assets during the month preceding the lodging of the application to open proceedings is legally invalid once proceedings are opened.
Under Austrian law, an action to set aside a transaction must be brought within one

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About the author:
Kathy specialises in restructuring and cross-border insolvency. She qualified as a solicitor in 1995 and has since worked for Weil Gotshal & Manges and Freshfields. Kathy has worked on some of the largest restructuring cases in the last decade, including Worldcom, Parmalat, Enron and Eurotunnel.