The German economy in August 2023 – still in Lala Land or is cognitive dissonance easing?

After being too optimistic in March (here), realising that we have seen the best (for 2023) already (here) in April, then seeing the German economy going south with astonishing speeed in May (here), larger parts of the public finally realised in June that the economy is indeed stalling (here), but in July still seeing a “b(e)acon of hope” (here). So, let’s take a closer look at the German economy whether this hope is still warranted in August:


The “dual-purpose trust” – underestimated instrument in turnaround situations?

When the company is in crisis, the confidence of the financing banks in the management and shareholders is frequently shaken. Still, insolvency is seen as a potential value destroyer and is not necessarily the first choice in restructuring (if a compulsory filing can be avoided). In addition, sustainable restructuring often requires “fresh money”, which cannot be obtained through restructuring per se. Moreover, the financing banks are often not willing to re-finance if previous shareholders (without giving new money on their part) would participate in a cash injection. A potential investor sees things similarly and usually does not want to deal with the existing shareholders either. In such situations of conflicting interests, the so-called “dual-purpose trust ” can provide a solution. However, some special features have to be taken into account when using such a trust, which are discussed in the following article, as well as the latest BGH case law in this area.


Supervisory bodies in the corporate crisis

The crisis of the company is the
hour of the supervisory board.”

v. Schenck

While legal literature is unanimous on the catalog of duties of the supervisory bodies, especially in a corporate crisis, rulings by higher courts in this area remain sparse and are mostly of an older nature. In view of the recent scandals, such as Wirecard or RBB (for the latter see here), which are currently being dealt with by the courts, it is probably only a matter of time before the courts also start to ask questions about the respective responsibility of supervisory bodies again and in greater depth. The following article therefore outlines the current status in theory and practice and derives some practical tips from current cases.


Whistleblower protection – all wrapped up in Germany?

After some political wrangling, the German Bundesrat approved the so-called “Whistleblower Protection Act” on May 12, 2023 (here, in German), thus clearing the way for the implementation of the corresponding EU directive. The practical need for such a law is obvious, not only in view of the events at the Berlin-Brandenburg broadcasting service RBB (see here for more details). However, it is not only larger companies that are likely to be under increased pressure to implement the law, as it is expected to come into force in mid-June and only very short implementation periods are envisaged. This is reason enough to supplement the previous explanations (see here) by highlighting some of the important points of the upcoming law, particularly for small and medium-sized enterprises.