The Federal Court of Justice (BGH) continued with its extensive interpretation of the rules for contesting transactions under insolvency law in a judgment dated 21 February 2013 (BGH IX ZR 32/12). In the case before the court, direct shareholder A in company T sold a claim under a loan to B at below par value. Following assignment, T repaid the loan to B at the nominal amount plus interest. Insolvency proceedings were opened around two months later in relation to T’s assets. The BGH’s decision covers three aspects:

  1. It is not only claims of the direct shareholder, but also claims from companies that are connected with the shareholder horizontally or vertically that are subject to subordination of their claims under insolvency law in accordance with section 39(1) no. 5 of the Insolvency Act (InsO) and/or subject to being contested under insolvency law under section 135 of the Act.
  2. Subordination also persists where the shareholder relinquishes their equity interest in the company or assigns the claim under the loan to a nonshareholder. The acquirer must accept the subordination risk in accordance with section 404 of the German Civil Code (BGB). However, the BGH was of the opinion that this should only apply for the period of a year under section 135(1) no. 2 of the InsO, i.e. if the shareholder either relinquishes their shareholder position or assigns the claim to a non-shareholder within this period. To this extent, the BGH’s decision does not add anything new to the law as it is already understood. However, the surprise is in part
  3. of the judgment, according to which the repayment of the loan to the acquirer of the claim can also be contested for the full amount against the shareholder who sold the claim at a discount. According to the court, the assignee and shareholder are joint debtors of the contestable payment. The BGH based its decision for this extensive case law on a stated desire to prevent avoidance arrangements.