On 19 March 2026, the Court of Justice of the European Union delivered its judgment in Case C-43/25, SML Maschinengesellschaft mbH, on the interpretation of Article 13 of Regulation (EC) No 1346/2000 on insolvency proceedings.
The ruling addresses a question of considerable practical significance at the crossroads of insolvency law and private international law: may a shareholder creditor rely on a foreign choice-of-law clause to shield repayments of shareholder loans from claw-back by an insolvency administrator applying the law of the State in which proceedings were opened?
The Court's answer is an unequivocal no.
The case arose within an intra-group financing structure. SML and MAPLAN belonged to the same Austrian group and were indirectly controlled by the same Austrian parent, Franz S. Huemer GmbH, which held 78% of SML's share capital and 33% of MAPLAN's - the basis on which the German courts treated SML as a shareholder of MAPLAN for the purposes of § 39(1)(5) InsO. In 2015, SML granted MAPLAN two loans - Euro 3 million and Euro 2 million - both governed by Austrian law, the first secured by an assignment of receivables. MAPLAN made partial repayments of capital and interest in the months preceding October 2016, when insolvency proceedings were opened against it in Germany. In those proceedings, the insolvency administrator brought a claw-back action against SML for restitution of the amounts repaid, on the basis that German rules subordinated SML's claims as shareholder loans. SML invoked Article 13 of Regulation No 1346/2000, arguing that Austrian law - chosen as the law governing the loan agreements - did not permit those acts to be challenged.
Under Article 4 of Regulation No 1346/2000, the law of the State in which insolvency proceedings are opened (the lex concursus) governs, among other matters, the lodging and ranking of claims and the rules on the avoidance of acts detrimental to the general body of creditors. Article 13 carves out a narrow exception to those avoidance rules where the beneficiary of the act demonstrates that it is governed by the law of another Member State and that such law does not allow the act to be challenged by any available means.
The Court, recalling that Article 13 must be interpreted strictly, held that its scope is confined to the situation covered by Article 4(2)(m):
“Since Article 13 of that Regulation constitutes a derogation from Article 4(2)(m) of the same Regulation, its scope is confined to the situation covered by that latter provision, namely where what is at issue are the rules relating to the voidness, voidability or unenforceability of acts detrimental to the general body of creditors, and not those relating to the claims to be lodged in the debtor's insolvency or to their ranking.”
Applied to the case, the distinction is decisive: the administrator's claw-back action was directed at enforcing the ranking of creditors, not at avoiding an act as between creditors of equal rank. Article 13 does not extend to the rules on the lodging or ranking of claims, which are governed by Article 4(2)(g) and (i). The operative part of the ruling reflects this reasoning:
“Article 13 of Regulation (EC) No 1346/2000 must be interpreted as meaning that it cannot be invoked by a person who has benefited from repayments of a shareholder loan, regarded as detrimental to the general body of creditors, in response to a restitution claim brought by the insolvency administrator of the company that was debtor under the loan, where that claim is directed at enforcing the creditor ranking provided for under the law of the State in which the insolvency proceedings were opened.”
The practical consequence is unmistakable: the German rules on the subordination and claw-back of shareholder loans cannot be circumvented in cross-border settings by designating a foreign law as the governing law of the financing agreement. Where insolvency proceedings are opened in Germany, the creditor-ranking rules of German insolvency law prevail irrespective of the parties' choice of law.
Looking beyond the immediate case, for European corporate groups - including, prominently, Austrian and Italian groups with German subsidiaries - that routinely rely on intra-group shareholder loans as a financing tool, the judgment is a timely reminder that the insolvency risk profile of such arrangements must be assessed under the insolvency law of the jurisdiction in which the borrowing entity is established, irrespective of the governing law chosen for the loan agreement. Structuring decisions taken in healthier times may thus carry adverse consequences in distress: the lex concursus will govern creditor priority and distribution, and the Article 13 shield will not be available where the administrator's claim seeks to enforce creditor ranking rather than to pursue traditional transaction avoidance. The case also underscores the importance of rigorous conflict-of-laws due diligence when designing intra-group funding structures across Member States with divergent shareholder-loan regimes.
