German Federal Supreme Court hold former shareholder liable

The German Federal Supreme Court has confirmed the liability of former shareholders, if a shareholder loan that was sold to and collected by a third party has been repaid by the company within one year prior to insolvency.

According to a recent decision of the German Federal Supreme Court, a sale of a loan which qualifies as a subordinated ‘shareholder loan’ (i.e lending by stakeholders with more than 10 per cent of equity) may lead to joint and several liability of the seller and the purchaser and, therefore could have a significant impact on future corporate restructurings of shareholder financing.

The claimant was an administrator of an insolvent limited partnership. The defendant was an indirect limited partner of this partnership. After having granted a loan to the limited partnership the defendant sold and assigned its claims for repayment of the shareholder loan to a third party. Ten weeks later, this third party collected the outstanding repayment claim from the limited partnership. After the limited partnership had filed for insolvency two months later, the administrator contested the loan repayment and claimed back the amount from the defendant (and not the third party)…

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