Germany is a bellwether for international economic robustness, but the first half of the year saw the number of German companies filing for insolvency proceedings rise by a hefty 20.5% compared to the first half of 2022 (according to Destatis). This is the largest percentage jump in more than two decades.
No wonder that investors such as private equity or venture capital funds which have (indirectly) acquired shares in a portfolio company in Germany may be nervous. Under German law, investors using a typical acquisition structure face the risk of the total loss of their equity investment during insolvency proceedings of a portfolio company, as the proceeds from the sale of any assets (unless otherwise stipulated by an insolvency plan) ar…
Read the full article at: https://www.alpha-week.com/boom-bust-investor-risks-when-german-portfolio-company-faces-insolvency