German Court Decision on English Part 26A Plan Recognition Disregards Major Factors Incl. Hague Convention, BGH Caselaw According to Expert Report; Schemes Unaffected; Appeal Likely

Recognition of English Court orders on restructuring tools in continental Europe has been an uncertain field post Brexit, but few expected the Frankfurt Regional Court to fire such a sharp shot across London’s bows. In a preliminary judgment on Aug. 22, the German court declined to recognize the English Court’s sanction order for Aggregate’s English Part 26A plan and ordered repayment of €5 million to a dissenting creditor. The decision is subject to appeal.

There had been a previous assumption from some practitioners that German courts would either treat English Part 26A plans as insolvency proceedings under Section 343 of the German Insolvency Code, or as civil judgments under Section 328 of the German Civil Procedure Code.

The Frankfurt court’s ruling clashed starkly with expert evidence filed by German auto parts supplier Standard Profil in its recently approved English scheme of arrangement. According to expert opinions seen by Octus, Professor Christoph Thole of the University of Cologne opined to the High Court that both schemes and plans were capable of recognition in Germany under international treaties and domestic law alike. Thole also provided expert evidence for Aggregate’s sanction hearing in February 2024, in support of recognition in Germany.

In his supplemental report filed after the Frankfurt court’s decision, also seen by Octus, Thole pointed out the provisional character of the decision, its disregard for the approach of the German Federal Court (Bundesgerichtshof, or BGH), and its failure even to grapple with the Hague Convention.

We take a look at the lacuna created by Brexit in cross-border recognition of English Court decisions with a focus on Germany.

Key Takeaways

• The Frankfurt Regional Court issued a preliminary ruling in August, refusing recognition of Aggregate’s English Part 26A sanction order and ordering repayment of €5 million to a claimant.
• The German court held that the plan was not an “insolvency proceeding” under Section 343 of the German Insolvency Code (InsO) because it lacked aspects to make it a fully collective proceeding.
• It further found recognition under Section 328 of the German Code of Civil Procedure (ZPO) failed on reciprocity grounds, reasoning that English courts would not reciprocate due to the Rule in Gibbs.
• Recognition under the Brussels Convention was dismissed as unavailable post-Brexit.
• Professor Thole’s July 2025 opinion, however, argued that schemes and plans were highly likely to be recognized in Germany under the Hague Choice of Court and Hague Judgments Conventions.
• The September 2025 supplemental opinion stressed that Frankfurt’s preliminary ruling is inconsistent with BGH case law and international treaty obligations.
• The Gategroup decision had already signaled that Part 26A plans fall within the scope of EU insolvency law, depriving them of Brussels, Lugano and Hague automatic recognition.
• In contrast, schemes remain classified as civil matters and could continue to enjoy treaty-based recognition routes, perhaps making them more reliable for German-compromised debt claims.

The Aggregate Plan and the Preliminary Frankfurt Ruling

Aggregate Holdings, the troubled German real estate developer, sought refuge in an English Part 26A restructuring plan sanctioned in March 2024. The plan, in short, provided €190 million of new senior financing for the flagship Ku’damm development in Berlin, extended €775 million of senior debt by two years, and wiped out €245 million of subordinated debt. To access the English jurisdiction, Aggregate shifted the plan company’s center of main interest to England. The English court sanctioned the plan despite challenges on forum shopping made at the time.

A German creditor, KV Hessen, challenged the plan. It sued in Frankfurt seeking repayment of €5 million of senior debt, arguing that the extension under the plan was ineffective in Germany. The case was heard under the German Urkundenprozess, an accelerated documentary procedure where only documents may be relied on, excluding witness and expert evidence. There appears to be no adversarial hearing in this process and rival expert evidence was deemed inadmissible.

On Aug. 22, the Frankfurt Regional Court agreed with the creditor and ordered repayment of the €5 million. It held that the English sanction order was not recognizable in Germany:

• As insolvency proceedings under Section 343 InsO;
• As a civil judgment under Section 328 ZPO; or
• Under Article 26(1) of the Brussels Convention.

Section 343 InsO: the Collectivity Requirement

The first limb of Frankfurt’s reasoning was that Part 26A plans are not insolvency proceedings (Insolvenzverfahren) within the meaning of Section 343 InsO. That provision recognizes foreign insolvency proceedings if they are collective in nature. The judge held that collectivity means all creditors must be bound. Because Aggregate’s plan only affected senior lenders and not all creditors, the test was not met.

This was a sharp contrast with the English High Court’s approach. When sanctioning Aggregate’s plan, the English judge accepted expert evidence that StaRUG proceedings in Germany – themselves listed in Annex A of the EU Recast Insolvency Regulation – do not need to bind all creditors, and therefore collectivity can be partial. The Frankfurt court’s refusal to engage with that literature was quite surprising.

Professor Thole, in his supplemental report, criticized the “surprisingly short” decision of the Frankfurt court. He noted that German scholars and the BGH have adopted a flexible interpretation of collectivity in light of preventive restructuring frameworks. Germany’s restructuring plan StaRUG, introduced in 2021, is itself only partially collective. The Frankfurt judge did not even cite this development, nor the EU Insolvency Regulation’s treatment of preventive proceedings as collective.

Thole told the English court he strongly believes that in the further course of the (appeal) proceedings, either the Higher Regional Court or the BGH will share the predominant view that in light of well-accepted principles of universalism and under a wide and flexible interpretation of Section 343 InsO, the restructuring plan can be characterized as an insolvency proceeding.

Section 328 ZPO: Reciprocity and the Rule in Gibbs

The Frankfurt court then turned to Section 328 ZPO, which governs recognition of foreign civil judgments. The judge accepted that an English sanction order could qualify as a judgment in civil matters, but he held that the reciprocity requirement was not satisfied.

Reciprocity requires German courts to be satisfied that German judgments would be recognized in the foreign state under roughly equivalent conditions. The Frankfurt court accepted a junior creditor’s submission that the English Rule in Gibbs (under which foreign judgments cannot compromise English law debt) undermined reciprocity. The court held that the burden of proof lay with the debtor and that in documentary proceedings it was impossible to adduce expert evidence on reciprocity. On that basis, it refused recognition.

Thole was critical of this reasoning. He pointed out in his supplement report that under Section 293 ZPO, foreign law is to be investigated by the court ex officio, not left to the parties. German appellate courts have long made clear that reciprocity must be assessed generously and that doubts must be resolved in favor of recognition. He also noted that the Hague Conventions, binding on both the U.K. and Germany, themselves establish reciprocity. The Frankfurt decision failed to engage with this.

Brussels Convention: A Post-Brexit Dead End

Finally, Frankfurt rejected reliance on Article 26(1) of the Brussels Convention, noting that it was superseded by the Brussels I Regulation in 2002 and could not revive post-Brexit. That closed another door for recognition.

Thole’s July 2025 Report: Schemes and Treaty Recognition

Before the Frankfurt Court’s ruling, Thole’s July 2025 opinion had already set out why English schemes are highly likely to be recognized in Germany. His reasoning rested on three pillars:

1. Hague Choice of Court Convention (HCC). Aggregate’s amended notes included exclusive English jurisdiction clauses. Under Article 8, judgments of a chosen court must be recognised by other contracting states. Both the U.K. and Germany are parties to the HCC. Thole noted that schemes fall outside the insolvency exclusion in Article 2(2)(e) HCC, since they do not require insolvency and do not provide cross-class cramdown.
2. Hague Judgments Convention (HJC). Effective from July 2025 for the U.K., it provides a further recognition route for civil and commercial judgments. Thole highlighted Article 5(1)(g), which allows recognition of judgments on contractual obligations performed in the forum state – here U.K. – where payments under the notes were due.
3. German domestic law under Section 328 ZPO. Even without treaties, schemes can be recognized as civil judgments. German literature and the BGH treat schemes as adversarial proceedings producing judgments within the meaning of Section 328.

Thole dismissed public policy objections, noting that the debts were not governed by German law and amendments to jurisdiction clauses were validly made under the contracts.

Thole’s September 2025 Supplemental Report: Responding to Frankfurt Judgment

After the Frankfurt Court’s August ruling, Thole was asked to revisit his conclusions and provided a later September 2025 supplemental report. He noted the following:

First, it was only a preliminary or provisional judgment (Vorbehaltsurteil) issued as part of the streamlined Urkundenprozess. Even after the issuance of such judgment, the proceedings remain pending before the very same court at first instance in so-called “subsequent proceedings” (Nachverfahren). Furthermore, and parallel to the subsequent proceedings, it remains subject to an appeal to the Higher Regional Court.

As a point of procedural law, Thole also noted that the judge was obliged to refer the matter to the entire chamber of the court (with three sitting judges instead of one) but he did not do so. Section 348(3) ZPO requires such a referral where an issue is of fundamental significance and of general importance beyond the specific case. In any event, this may indicate that the judge did not intend to provide guidance beyond the specific case, Thole explained.

Second, the judgment only addressed restructuring plans, not schemes. The two are distinct: schemes are civil matters, not insolvency proceedings, as confirmed by the BGH in 2012. The courts collectivity analysis under Section 343 InsO is irrelevant to schemes.

Third, international treaties trump domestic law. Both the HCC and HJC oblige Germany to recognize English scheme sanction orders, without needing to examine reciprocity. The court made no mention of these treaties.

Finally, even under Section 328, the court’s approach to reciprocity was flawed. It ignored Section 293 ZPO’s requirement to investigate foreign law ex officio. It assumed, wrongly, that lack of evidence in documentary proceedings justified non-recognition. And it failed to note that the Rule in Gibbs had not been treated as a bar to reciprocity in previous cases.

The Gategroup Backdrop: Schemes vs. Restructuring Plans

The Frankfurt court’s decision also sits alongside the earlier English law Gategroup judgment in London. In 2021, Zacaroli J held that Part 26A plans fall within Article 1(1) of the Recast Insolvency Regulation and therefore outside Brussels regulation and Lugano and Hague conventions as reported. That stripped plans of automatic recognition in the EU. Practitioners had hoped the Hague Choice of Court Convention could still provide a route, but Zacaroli’s analysis foreclosed that.

Schemes, however, remained civil matters, unaffected by the insolvency classification. They continue to rely on Brussels (when the U.K. was still an EU member), Lugano (had the U.K. joined) and Hague. Post-Brexit, their best routes are Hague and domestic comity. The German court’s narrow reading of insolvency proceedings arguably strengthens schemes’ position: If full collectivity is required for insolvency, then schemes are clearly outside the insolvency exclusion in Hague.

Implications for Recognition Practice

The combined effect is that Part 26A plans face mounting obstacles in Germany:

• Gategroup may exclude them from treaty recognition;
• The Frankfurt decision doubts both Section 343 InsO and Section 328 ZPO routes; and
• Reciprocity concerns tied to Gibbs cast a further shadow.

For schemes, the outlook is brighter. They remain civil matters, supported by exclusive jurisdiction clauses and covered by Hague Conventions. Expert opinion remains firm that recognition in Germany is highly likely. Until Frankfurt’s ruling is appealed and clarified, risk-averse structuring may push German-connected restructurings back toward the older English scheme.