GERMANY LAW AND PRACTICE Contributed by: Wolfram H Krüger, Barbara Rybka, Markus Wollenhaupt and Alexander Zitzl, Linklaters
• when the relevant shareholder is not a direc - tor of the company and does not hold more than 10% of the registered share capital in the company (minority shareholding privilege – Kleinbeteiligungsprivileg ); or • when the shareholder has acquired shares with the intention of rescuing the company from insolvency (restructuring privilege – Sanierungsprivileg ). In addition, newly created debt is subordinated by law to outstanding debt to public authorities. 3.8 Lenders’ Liability Under Environmental Laws A lender holding or enforcing security over real estate cannot be held liable under environmental laws due to its position as lender/security ben - eficiary. Under the Federal Soil Protection Act, the pol - luter, all current and former users, and all current and former owners of a property can be held liable for contamination. The lender can, there - fore, be held liable in the unlikely circumstances that they were in possession of the property or that they are themselves the polluter. 3.9 Effects of a Borrower Becoming Insolvent In certain circumstances, a borrower’s insol - vency administrator may challenge agreements entered into by the borrower between one month and ten years prior to the filing for the opening of insolvency proceedings. The following are valid reasons for challenging security interests granted by the borrower: • the creditor had knowledge of the borrower’s illiquidity, or the borrower had already applied for the opening of insolvency proceedings, or the creditor was aware of circumstances
leading directly to the conclusion that the borrower was illiquid or had applied for insol - vency proceedings; • the creditor is a shareholder of the borrower; • the borrower provided the security intend - ing to discriminate against the rights of other creditors and the creditor was aware of this intention; • the creditor did not have a valid right to obtain the security that he or she was not due to receive, or was not yet due to receive, or was due to receive in a manner that was otherwise inconsistent with the original agree - ment between the borrower and the creditor; • the interests of other creditors were directly prejudiced at the time the security was granted (it not being sufficient that they might have been prejudiced as a result of granting the security); or • the security interest was granted gratuitously. If immediate and adequate consideration was received by the borrower for the transaction for which the security was granted, it can only be challenged by the insolvency administrator if the transaction was undertaken willfully to discrimi - nate against other creditors’ rights. If a transaction is successfully challenged, the secured creditor must repay any amounts already received or release the respective secu - rity interest. 3.10 Taxes on Loans There are currently no taxes or levies in connec - tion with real estate secured mortgage loans or mezzanine loans in Germany nor are there any proposals to impose those. Statutory notarial and land registry fees apply to any recordings in the land register, relevant for mortgages (see 3.4 Taxes or Fees Relating to the Granting and Enforcement of Security ).
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