The German Federal Court of Justice rules that the obligation to recover aid is only effectively and immediately implemented if insolvency claims are treated as non-subordinated liabilities

The Federal Court of Justice has ruled that the obligation to recover aid is only effectively and immediately implemented if insolvency claims are treated as non-subordinated liabilities. Accordingly, it found that the primacy of EU law must lead to the non-application of a statutory provision which treats capital-replacing shareholder loans as subordinated liabilities. Background & facts of the case The plaintiff granted S. GmbH (debtor) 15 loans totalling approx. DM 54.9 million in the period from 1997 to 2000. It also agreed to a deferred payment of a purchase price claim amounting to DM 3.1 million. These measures were taken in order to allow the restructuring of the debtor. Subject to the Commission’s approval, the loans were to be converted into grants. In the course of the

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Authors

  • Gleiss Lutz (Brussels)
  • Jones Day (Brussels)
  • Gleiss Lutz (Brussels)

Quotation

Ulrich Soltész, Philipp Werner, Harald Weiss, The German Federal Court of Justice rules that the obligation to recover aid is only effectively and immediately implemented if insolvency claims are treated as non-subordinated liabilities, 5 July 2007, e-Competitions July 2007, Art. N° 109085

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