Sowohl im amerikanischen als auch im deutschen Gesellschaftsrecht findet sich das Rechtsinstitut der eigenkapitalersetzenden Gesellschafterdarlehen. Die vorliegende Arbeit beschreibt die rechtlichen Voraussetzungen in beiden Rechtsordnungen und geht dabei der jeweiligen Teleologie des Rechtsinstituts auf den Grund. Hierbei werden im Rahmen eines Rechtsvergleichs das deutsche und das amerikanische Rechtsinstitut der kapitalersetzenden Gesellschafterdarlehen analysiert.
Anschließend wird aufgezeigt, wie die Umqualifizierung von Gesellschafterdarlehen in Eigenkapital nach den in Rechtsprechung und Literatur vertretenen Meinungen am besten vermieden werden kann. Es werden dabei zunächst die Verhinderungsmöglichkeiten nach deutschem und anschließend nach amerikanischem Recht dargestellt. Schließlich wird aufgezeigt, welche Strategien sich bei einer bilateralen Transaktion am besten zur Vermeidung einer Umqualifizierung nach beiden Rechtsordnungen eignen.
Table of Contents
A. Introduction
I. Description of the Topic
II. Motives for Granting Shareholder Loans Instead of Contributing Equity
B. Rules Applicable to Loan Subordination
I. German Law
1. The Purpose of the Rules on Equity Substitution
a. Introduction
b. Speculation at the Costs of the Outside Creditors
c. Deception of Creditors
d. Insiders’ Finance Responsibility
e. Summary
2. Requirements of Loan Subordination
a. Shareholder Loan
aa. Substantive Point in Time
bb. Cases concerning the “Quasi-Shareholder”
b. Equity Function of the Loan
c. “Granting“ of a Loan
d. Exemptions
e. Differences between the Statute and the BGH Decisions
3. The Consequences of Equity Replacing Loans
4. Summary
II. US-Law
1. Recharacterization
2. The Doctrine of Equitable Subordination
a. Historical Development of the Doctrine of Equitable Subordination
aa. First Step: Doctrine of Piercing the Corporate Veil
bb. Second Step: The Doctrine of Equitable Subordination
cc. The Differences between Piercing the Corporate Veil and Equitable Subordination
b. Requirements for Applying Equitable Subordination
3. Application to Outside Lenders (Lender Liability)
4. Summary
III. Common Features and Differences of U.S. and German Law
1. Objectives
2. Different Historical Paths of Development
3. Rules Concerning Outside Lenders
4. Importance of Lenders’ Behaviour for Legal Classification
5. Results of the Comparison for Development of Measures to Avoid Subordination
C. Strategies for Avoiding Liability
I. German Law
1. Avoid Fulfilling the Requirements for Application
a. Qualification as Outside Lender
aa. Share of the Profits
bb. Power to Influence Fundamental Decisions
cc. Summary
b. Avoiding the Equity Function of the Loan
2. Fulfilling the Requirements of an Exemption
a. Minority Clause
b. Privilege for Rehabilitation
aa. Acquisition of Shares
bb. Intent to Rehabilitate
cc. Time of Rehabilitation
dd. Consistency of § 32 a (3) sentence 3 GmbHG
ee. Summary
II. US-Law
1. Avoiding Equitable Subordination
2. Avoiding Lender Liability
3. Avoiding Recharacterization
4. Summary
III. Strategies Applicable in both Legal Systems
D. Summary
Research Objectives and Themes
This thesis examines the legal complexities surrounding the subordinating requalification of shareholder loans in both Germany and the United States. The primary research objective is to analyze the rules of equity substitution and equitable subordination, identify commonalities and differences between the two jurisdictions, and derive practical strategies for lenders to mitigate the risk of loan subordination while maintaining entrepreneurial influence.
- Comparison of German equity substitution laws and U.S. doctrines of equitable subordination and lender liability.
- Analysis of the "insiders' finance responsibility" and its impact on contractual loan covenants.
- Evaluation of legal exemptions such as the German "minority clause" and "privilege for rehabilitation."
- Development of risk-mitigation strategies for institutional lenders dealing with financially troubled borrowers.
Excerpt from the Book
b. Speculation at the Costs of the Outside Creditors
It would seen at first glance that the granting of a shareholder loan would always have positive effects on the outside creditory because it improves the liquidity position of the company.
However, the shareholders’ ability to improve the economic outlook of the company by increasing debt even if there is very little equity capital, endangers the positions of the other creditors. It results in a higher leveraging of the company because the improved liquidity position is only achieved with an increase of debt. When additional creditors are added, the share of the existing creditors in the overall assets of the GmbH declines. Furthermore, when the company’s debts increase, the risk of insolvency also climbs. In the insolvency proceedings creditors receive a smaller return on their credits because of shareholder participates in the proceeding with his loan as pari-passu claimant. However, if the company recovers, the shareholder will not only earn his interest as every other lender but will also take part in the company’s earnings, which may be higher than the interest payments. In this way, the relation between risk bearing and participation in the profits no longer fulfils the balance provided by the rules of capital maintenance, and as the creditors have assumed it in their contracts with the GmbH. Moreover, the shareholder usually has superior knowledge about the prospects of the company because of his insider knowledge. As a result, the shareholder shifts a part of the risk he is supposed to bear to the outside claimants. The shareholder also circumvents the restrictions connected with the contribution of equity, beginning with formal requirements and ending with ranking in insolvency. In the end, the shareholder speculates at the costs of the outside creditors.
Summary of Chapters
A. Introduction: This chapter provides an overview of the topic, focusing on why the subordinating requalification of shareholder loans is a critical issue in international business law.
B. Rules Applicable to Loan Subordination: This section details the legal frameworks in Germany (equity substitution) and the U.S. (equitable subordination), explaining the theoretical underpinnings and requirements in both jurisdictions.
C. Strategies for Avoiding Liability: This chapter outlines concrete approaches for lenders to avoid or reduce the risk of loan subordination in German and U.S. law, including the usage of specific covenants and statutory exemptions.
D. Summary: This section concludes the work by synthesizing the main findings and emphasizing the necessity of continuously monitoring judicial developments to manage subordination risks.
Keywords
Loan subordination, Equity substitution, Equitable subordination, German law, U.S. law, Shareholder loans, Lender liability, Creditor protection, Recharacterization, Financial crisis, Insolvency, Insider knowledge, Capital maintenance, Covenants, Risk distribution
Frequently Asked Questions
What is the core subject of this thesis?
The thesis explores the legal risks of "subordinating requalification" of loans, where a creditor's loan is treated as equity and thus subordinated in insolvency, under both German and U.S. law.
What are the primary thematic areas covered?
The document covers the legal doctrines of equity substitution in Germany and equitable subordination/lender liability in the U.S., alongside practical strategies for lenders to navigate these risks.
What is the primary research goal?
The goal is to determine how shareholders and institutional lenders can structure financing arrangements to avoid unintended subordination while still protecting their investments in financially troubled companies.
Which legal methods are employed?
The author utilizes a comparative legal analysis, examining statutes, court decisions (such as the BGH in Germany and the "Deep Rock" decision in the U.S.), and academic scholarship to evaluate current practices.
What does the main body address?
It covers the requirements for applying subordination rules, the consequences for creditors, the role of "insiders' finance responsibility," and detailed strategies for avoiding liability through covenants and legal exemptions.
How would you characterize this work in keywords?
The work is characterized by terms such as loan subordination, equity substitution, equitable subordination, lender liability, and financial restructuring.
How does the "pledge decision" of the German Federal Court of Justice influence lending?
The decision implies that bank lenders who secure loans with share pledges and additional control rights may be treated as "quasi-shareholders," thereby triggering subordination rules even if they are not traditional shareholders.
What is the "3-prong test" used in U.S. bankruptcy courts?
It is a judicial standard used to determine if equitable subordination is appropriate, requiring a finding of inequitable conduct, injury to creditors, and consistency with the Bankruptcy Act.
Why is the "privilege for rehabilitation" in Germany considered risky?
While intended to facilitate business recovery, its requirements—such as the subjective intent to rehabilitate and the complex definition of a crisis—remain subject to judicial interpretation, making reliance on it uncertain.
- Citation du texte
- LL.M. Simon Schuler (Auteur), 2003, Avoiding the requalification of loans under German and U.S. Law, Munich, GRIN Verlag, https://www.grin.com/document/49548
