Subordination declarations play a major role for crisis-threatened enterprises in the prevention of duty to apply for insolvency procedures. The German legal environment for Shareholder’s Subordination Agreements has recently changed drastically, since Germany has significantly changed and adapted the concept of Corporate Equity Protection – which was formally laid down in section 30 and the following of the Limited Liability Company Act (GmbHG) – for all kinds of enterprises and moved it into the legal framework of Insolvency Law (InsO).
This article covers the legal situation before and after the reform of the concept of Corporate Equity Protection and gives a coherent, practical presentation of the commercial, insolvency, and tax law aspects of this still important financing instrument.
Intertax