[Skip to main content]

Turnaround Management Association

Share this page:

< back to news index

In all beginnings…

By Volker Beissenhirtz, Lawyer & Partner, CIC Consulting Partner GmbH, Berlin

...there is (normally) magic. But not this time around.

Already before today, the ground was laid for an "interesting" year: Not only is Germany currently "experiencing" its new government already hard at work (of course, one does not want to call the current goings-on "magic"; see here for a commentary on the coalition agreement, in German). But it also has to be, since already before the escalation in Ukraine (see on the current situation here, in German) Germany's economic "engine" was probably sputtering not only due to the pandemic, but also for the increasing inflation (see for December 2021 here and for January 2022 below). The war in Ukraine will render most forecasts for this year utterly useless. And this will most probably be the least of our coming problems not only this year.

For the time being, the new coalition is holding back on magic tricks on the "permanent construction site" of insolvency law; the corresponding plans in the coalition agreement (here, in German) rather refer to additional protective measures for consumers, the EU-wide harmonisation of insolvency law (para. 5727) and support for an "initiative for a codified international state insolvency procedure" (para. 5160).

So, for once, there is no need to evaluate a new reform-project. And indeed, this newsletter has become somewhat case law-heavy. I spontaneously postponed the planned article on factoring in favour of a commentary on the BGH's recent decision on rent reduction due to corona.

Furthermore, I deal with the perennial topic of (contractual) subordination, or more precisely with two judgements on this subject that were handed down a little while ago. The subordination - integrated into a restructuring concept - is still one of the "standard tools" in the frequently cited "toolbox" of the turnaround professional. Now that the standards for the formulation of a so-called "qualified" subordination (i.e. avoiding over-indebtedness under § 19 InsO) have been clarified by the German Supreme Court (BGH) for several years (see here to trace the development), the discussion has shifted to the requirements for its use in general terms & conditions (especially in bond issues) and to the tax effect of the subordination. Both the BGH and the German Federal Fiscal Court (BFH) have in the meantime issued clarifications, which will be discussed below.

As always, I wish you a delightful reading. Keep calm & carry on!

Share this page:

< back to news index

[Go back to the top of the page]