In insolvency proceedings, claims for repayment of shareholder loans – particularly if granted to a company limited by shares or a limited commercial partnership – are generally subordinate. In its judgment of 15 November 2011 (II ZR 6/11), the Federal Court of Justice (Bundesgerichtshof, BGH) addressed whether and for what period this also applied to corresponding claims by former shareholders. Since the entry into force of the Act for the Modernisation of Limited Liability Company Law and for the Prevention of Abuse (Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbräuchen, MoMiG), this issue has been the subject of much discussion. The BGH’s judgment rejected the subordination of the claim for repayment of a loan made by a former shareholder a year after withdrawing from the company. The Court has thus provided legal certainty in relation to the duration of continuing liability with regard to financial assistance provided by former shareholders.

No subordination of claim for loan repayment by former shareholder

In the case in question, a shareholder granted his company a loan. Before the loan became due for repayment, the shareholder sold his shares to a third party, but left the loan in place despite no longer being a shareholder.

The basis for the decision was section 135(1)(2) of the Insolvency Act (Insolvenzordnung, InsO). Under this provision, repayment of shareholder loans to shareholders can be contested where the company has made this repayment within one year of a request to open insolvency proceedings or subsequent to such request. The BGH has now decided that claims for repayment of shareholder loans are not subordinate if the shareholder who made the loan sold his shares to a third party but failed to demand repayment despite no longer being a shareholder. However, in accordance with section 135(1)(2) InsO, this is not the case where the shareholder has sold his shares in the company, i.e. has ceased to be a shareholder, less than one year before the request to open insolvency proceedings or subsequent to such request. The BGH has therefore confirmed the system change in shareholder financing intended by the MoMiG, which involves moving away from a crisis criterion and towards a more time-based approach.

Unresolved issues

The BGH’s ruling does not resolve the situation that arises when a shareholder, without having retired from the company, sells his or her shareholder loan to a nonshareholder. In view of the judgment discussed above, it would appear that in these cases subordination will not apply later than one year after selling the shares.