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technical solvency for German law purposes. A waiver of a
shareholder’s loan to a GmbH can be made subject to the condition
that the loan will be reinstated as soon as the financial
condition of the subsidiary GmbH has improved to permit repayment
out of surplus capital. When a waiver subject to reinstatement
is given, interest for the period of time during which the loan
had been waived can be imposed upon the subsidiary GmbH.
As part of its plan to dispose of G�nther and in order to
forestall the filing of a bankruptcy proceeding with respect to
G�nther, petitioner waived portions of G�nther’s intercompany
account balance.
The first waiver, executed on October 1, 1992, involved
several steps. First, Flint assigned $9 million of G�nther’s
intercompany account balance to Flint Electronics. Next, Flint
Electronics formally waived the receivable “In order to create a
sound financial basis for future operations * * * and to
recapitalize G�nther”. The waiver was subject to the condition
that “at such time that the net equity of G�nther exceeds its
registered capital * * * the waived amount will * * * [at Flint
Electronic’s option] be owed by G�nther again”. Flint
Electronics recorded the waived intercompany receivable as
contributed capital. This first waiver effectively reclassified
$9 million of the intercompany account payable on G�nther’s books
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