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G. Petitioner’s Plan To Dispose of G�nther
G�nther’s financial condition as of May 31, 1992, was so bad
that petitioner could have forced G�nther to file for bankruptcy
simply by withholding additional financial support. Petitioner
discussed bankruptcy but decided to pursue an orderly disposition
of G�nther to minimize petitioner’s losses from G�nther’s
financial collapse and to avoid triggering contingent and/or
potential liabilities, which did not appear on G�nther’s balance
sheet. The plan included making payments on the guaranteed bank
loans to prevent G�nther’s default until a purchaser could be
found, shoring up G�nther’s German balance sheet by waiving
petitioner’s right to collect a portion of G�nther’s intercompany
account balance, and minimizing petitioner’s exposure on the
lease guaranty by purchasing G�nther's interest in Actium.
1. The First Waiver Subject to Reinstatement
Under German GmbH law, a formal contribution to the capital
of a GmbH by its owner requires an amendment to the GmbH’s
charter, which must be effected in accordance with German GmbH
law. An informal contribution to a German GmbH, however, does
not require a charter amendment. One type of informal
shareholder financing available to a German GmbH is a waiver of a
shareholder’s loan to the GmbH.
A waiver of a shareholder's loan subject to reinstatement is
a form of contingent debt that can return a subsidiary GmbH to
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