Commercial Law and Insolvency
Core concepts
Know the forms of commercial companies, their organs, and the liability of partners and managers. Understand commercial transactions, the merchant's obligations, and the rules on commercial representation. Master insolvency proceedings: the opening criteria (insolvency and over-indebtedness), the role of the court and the trustee, the stay of individual enforcement, the ranking of creditors, and the restructuring versus liquidation tracks. Understand the avoidance of transactions prejudicial to creditors.
Traps
Questions confuse the liability of a manager in a limited liability company with that of a partner in a general partnership. Another trap concerns the effect of insolvency on pending enforcement: individual enforcement is generally stayed, and claims are satisfied through the collective procedure. Watch for confusion between the opening of proceedings and the declaration of insolvency.
Rule of thumb
When insolvency opens, individual enforcement stops and claims are ranked; always check whether a claim is secured, privileged or ordinary before predicting recovery.