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Insolvency-related Fiduciary Duties

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Questions and Answers

What is a major difference between German and U.S. law regarding the insolvency of a company?

In the U.S., creditors are often rejected when trying to trigger insolvency proceedings.

In the U.S., directors are solely responsible for filing for insolvency.

In Germany, insolvency is perceived as a disgrace rather than an opportunity. (correct)

In Germany, creditors have the right to put the entire business activities of a company up for pawn.

How does German law perceive the insolvency of a company?

As an opportunity for a fresh start.

As a positive sign of growth.

As a shameful occurrence. (correct)

As an unavoidable part of the business cycle.

What is a reason why directors are reluctant to comply with the obligation to file for insolvency in Germany?

They are not aware of the legal requirement.

They fear the negative stigma associated with insolvency. (correct)

There is no legal requirement for directors to file for insolvency.

They are financially unable to cover the costs of insolvency.

How does the German law rely on directors in terms of insolvency procedures?

Directors are obligated to file for insolvency promptly. Signup and view all the answers

What impact has the perception of insolvency had on the legislation in Germany?

The legislation lacks an appropriate framework for rescue procedures. Signup and view all the answers

What loophole allowed operators to bypass the obligation to file for insolvency in Germany?

"A positive forecast could override the obligation". Signup and view all the answers

Why were the obligations for directors to file for insolvency weakened according to the text?

"To enable operators to evade filing for insolvency by providing a positive outlook". Signup and view all the answers

How does German law differ from U.S. law regarding the responsibility of creditors during insolvency?

"Creditors play a more active role in initiating insolvency proceedings in Germany". Signup and view all the answers

"What cultural aspect contributes to the difficulties faced by insolvent companies in Germany?"

"The absence of a positive bankruptcy culture" Signup and view all the answers

"Why do many insolvent companies struggle with recovery in Germany according to the text?"

"Operators often avoid admitting insolvency due to stigma" Signup and view all the answers