Part Two – Commencement of Insolvency Proceedings. Assets Involved and Parties to the Proceedings

Chapter Two – Insolvency Estate. Classification of Creditors

Section 39 – Subordinated Insolvency Creditors

(1) The following claims are subordinated to all other claims of the insolvency creditors; they shall be satisfied in the following order and in proportion to their respective amounts if they have equal ranking:

1. the interest and penalties for late payment accruing on the claims of the insolvency creditors since commencement of the insolvency proceedings;

2. the costs incurred by the individual insolvency creditors through their participation in the proceedings;

3. fines, administrative fines, administrative penalties and periodic penalty payments, and also the incidental legal consequences of a criminal or administrative offence resulting in liability for a monetary payment;

4. claims to gratuitous performance by the debtor;

5. pursuant to subsections (4) and (5) claims for repayment of a shareholder loan or claims arising out of legal acts corresponding in economic terms to such a loan.

(2) Claims which creditor and debtor have agreed will be subordinated in insolvency proceedings shall be satisfied, in case of doubt as to their ranking, after the claims specified in subsection (1).

(3) The interest on the claims of subordinated insolvency creditors and the costs incurred by these creditors through their participation in the proceedings rank equally with the claims of these creditors.

(4) Subsection (1) No. 5 applies to companies that have neither a natural person nor a company in which a general partner is a natural person as general partner. If a creditor acquires shares upon imminent or existing illiquidity of the company or its overindebtedness for the purpose of its restructuring, until the viable restructuring of the company has been achieved this shall not lead to the application of subsection (1) No. 5 to the creditor’s claims arising out of existing or newly granted loans or claims arising out of legal acts corresponding in economic terms to such a loan.

(5) Subsection (1) No. 5 shall not apply to the nonexecutive partner of a company within the meaning of subsection (4) sentence 1 who holds 10% or less of the company’s liable equity capital.

COPYRIGHT © Schultze & Braun 2017

German Insolvency Code / in force since 29. December 2016