I. Introduction and facts

The BGH judgment deals in particular with two highly sensitive issues of insolvency (contestation) law in the context of corporate conduct. On the one hand, the BGH confirms its existing legal opinion on the question that sister companies can be third parties equivalent to shareholders (cf. III).
On the other hand, the judgment deals with the question, which to date has been largely unresolved, under which conditions and, in particular, from which point in time the financing character of a deferment of claims under mutual exchange contracts (e.g. service contracts) becomes so important in such a way that it is justified to equate these (exchange) claims with loan claims under insolvency law (cf. II).
The judgment of the BGH was based on the following facts:
The debtor, whose assets were the subject of insolvency proceedings opened on 3 March 2010 at its own request filed on 30 December 2009, was – like the defendant – a wholly-owned subsidiary of the parent company headquartered abroad. The debtor and the defendant had concluded a service contract under which the defendant provided various services in accordance with the contract at the end of 2008. In addition to other payments made at an earlier date, the debtor paid the contractually agreed remuneration for the services rendered at the end of 2008 by transfer to the defendant on 1 July 2009. At the time of that payment, the debtor’s account still had a credit balance. The insolvency administrator claimed payment of the amount paid on 1 July 2009 from the defendant on the grounds of contestation of insolvency.
The BGH affirmed the claim asserted by the insolvency administrator. It states that this payment, which discriminates against the creditors of the insolvency proceedings, constitutes the restitution of a (shareholder) loan-like claim within the meaning of section 39 para. 1 no. 5 German Insolvency Statute [Insolvenzordnung – InsO] and was made within the one-year period prior to filing the application (cf. section 135 para. 1 no. 2 InsO).
Insolvency law treats claims for the restitution of shareholder loans and claims from legal acts which correspond economically to a shareholder loan in the same way (cf. section 39 para. 1 no. 5 InsO). Pursuant to section 39 para. 1 no. 5 InsO, shareholder loans and claims equivalent to those in insolvency are subordinated to other liabilities of the insolvent company. This particularly means that the satisfaction of (shareholder) claims granted within one year of the filing of the application for insolvency proceedings can be contested (cf. section 135 InsO). The legal consequence of contesting an insolvency action under insolvency law is that everything that is taken from the assets of the insolvency debtor by such a contestable act must be returned to the assets involved in the insolvency proceedings (cf. section 143 para. 1 InsO).
In the above-mentioned judgment, the BGH clarifies that claims equivalent to (shareholder) loans also include claims from exchange transactions, in particular between group companies, if these are legally or de facto deferred. In the opinion of the BGH, this follows from the fact that, from an economic point of view, a deferral of payment for more than three months would in any case result in a loan being granted. It made no (economic) difference in this respect whether a (parent) company made an amount available to its subsidiary as a loan or, in the absence of enforcement of an existing claim, deferred the payment of an amount. In both cases, the subsidiary would have liquidity at its disposal which it could use for capital purposes without having to obtain other credit.
It is true that not every deferral of a claim that goes beyond the usual 30-day period for cash exchanges immediately leads to a reclassification as a financing instrument. However, this was to be assumed in principle if the deferment amounted to more than three months. This period was significantly longer than the period used in business practice for payment terms. The decisive factor in this respect was whether such a deferment agreement would undoubtedly not correspond to the normal market payment periods in the group relationship. In this respect, the statutory provision of section 271a German Civil Code [Bürgerliches Gesetzbuch – BGB] alone cannot be applied, according to which terms of payment of more than sixty days after receipt of the consideration can only be met after express agreement and if they are not grossly unreasonable for the payment creditor. For the reclassification (under insolvency law) as a financing instrument, it had to be established beyond doubt that the usual market maturity period had been exceeded. In fact, this had to be determined by an overall view of all circumstances. The statutory reference point in this respect is the three-month period of notice for a loan granted for an indefinite period (see section 488 para. BGB). Such long periods – beyond the still admissible payment period – would rather open up additional payment periods, so that the financing character would clearly come to the fore of the party agreement.

II. Third parties equal to shareholders

In addition, the BGH confirmed its case law in the ruling to the effect that group (sister) companies may also be equated with shareholder creditors in insolvency law (section 39 para. 1 no. 5, section 135 para. 1 InsO).
With the broad legal wording of section 39 para. 1 no. 5 InsO, the old legal situation should be adopted according to which legal acts of third parties are equivalent to the granting of shareholder loans if they “correspond economically” to them. Thus, third party services are covered if the third party is “equivalent to a shareholder” from an economic point of view as a result of a “horizontal or vertical link”. Such a connection exists with sister companies which have the same (significantly involved) shareholder, if this shareholder can exert considerable influence on the decision of the company granting the deferment, which is in particular the case if this shareholder can issue instructions to the management via a majority of votes in the shareholders’ meeting in accordance with section 46 no. 6 Limited Liability Companies Act [Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG].

III. Advice and consequences for consulting practice

The convincing judgment in terms of content contributes to legal certainty in practice. Even if the BGH allegedly focuses strongly on the three-month period, the consideration addressed in the judgment should be considered taking into account the particularities of the individual case, in particular the usual payment agreement in the respective market environment and the exceptional nature of longer deferment agreements.
Companies in group structures should pay meticulous attention, especially in times of economic downturn, not to arrange financing by deferring payment obligations due to intra-group service relationships in order to avoid protracted (judicial) disputes with an insolvency administrator in the event of insolvency.