Waiver of creditors’ claims as a rescue

In an economically difficult situation, means may be resorted to that are beyond the realm of the imaginable under normal circumstances. One such means is asking creditors to waive claims as a restructuring contribution by the company itself. Such a step can be successful if all creditors are included in the financing. If the creditors can be convinced of a successful restructuring, for which a debt cut is a necessary prerequisite, they may agree to this step. They are then counting on being able to do business with your company after the successful reorganization, which would no longer be possible if the company were broken up.

In terms of commercial law, a debt waiver has the effect of cancelling obligations. Interest and repayment instalments are no longer due for the liabilities that are no longer incurred, and the equity ratio increases.

But beware: For tax purposes, a waiver of payables for business reasons triggers a tax burden because your business receives taxable income as a result of the waiver of payables. If the waiver is deemed to be for corporate purposes, the total amount of the waiver is treated as a tax-neutral capital contribution. Such possibilities are provided for by tax law, in particular for cases of reorganization. The interrelationships are complicated. Therefore, have the implementation of a debt waiver designed in advance by a good tax advisor who is experienced in crisis management.

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