Vol 16 (2019) - Issue 3

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Reversal of Value Extraction Schemes: The German Perspective

Synopsis

Value extraction schemes, used by shareholders who buy a company in financial distress in order to strip it of its assets, are intensively discussed in the UK. Under German law – and the same holds true for many other European jurisdictions – such schemes can be tackled in various ways. Remedies can be found in transactions avoidance law, particularly through rules on transactions on an undervalue and on intentionally fraudulent transactions. Alongside, instruments of company law – e.g. directors’ or shareholders’ liability or rules on share capital protection – can be activated. In recent case law, the German Bundesgerichtshof has also applied tort law, developing the legal figure of ‘existence-crushing intrusion’. In all, German law addresses the problem of value extraction schemes sufficiently.